Search results for  Class Actions

Quebec is a fertile ground for class actions, with over 550 active cases and between 50 to 100 applications for authorization filed each year. While 2023 marked the fifth anniversary of the “new” class action division: what is there to watch in 2024? Read on to find out. Opioids and the State: Sanis Health v. British Columbia Can a state be a plaintiff to a class action? Can it be the plaintiff to a class action in another state? Can it be a class member in another state? In 2018, British Columbia adopted the Opioid Damages and Health Care Costs Recovery Act1 [ORA] allowing the government to institute class action proceedings regarding “opioid-related wrongs.” This was modelled after an earlier legislation targeting “tobacco-related wrongs,”2 the constitutionality of which had been upheld by the Supreme Court.3 The ORA, however, allowed not only British Columbia to institute such proceedings, but also, provided it had commenced such an action, to bring it forward “on behalf of a class consisting of one or more of the governments of Canada and the provinces or territories of Canada.”4 The constitutionality of this provision was challenged, without success in the first instance5 and on appeal.6 Though the Court of Appeal upheld the validity of the provision, it did characterize it as “a bold step, if not an experiment, in bringing government-led class litigation as close as possible to truly “national” proceedings in Canada’s federal structure.”7 This boldness snowballed: Similar laws have been adopted throughout Canada.8 Unsurprisingly, the Supreme Court of Canada has granted leave.9 A hearing should be scheduled in 2024. Relatedly, in Quebec, the parties are awaiting judgment on an application for authorization to institute a class action against several pharmaceutical companies10 relating to the manufacturing, marketing, distribution and sale of opioids. In this case, the plaintiff is seeking to represent all persons in Quebec who suffer, or has suffered, from opioid use disorder following the use of prescription opioids since 1996. It is now settled law that one person may sue several defendants in a single action regarding an allegedly common practice even if that person does not have a direct cause of action against each defendant, provided that the proposed representative is otherwise able to adequately represent the members who do.11 It remains to be seen whether the representative plaintiff put forward in this case will be able to fulfill his role against approximately 20 companies having marketed more than 150 different products over more than 25 years. Jurisdiction over foreign defendants Are allegations sufficient to establish the jurisdiction of Quebec authorities over foreign defendants that are distinct from their Quebec subsidiaries?12 And if so, how should the geographical limits of the putative class members be defined? In the Bourgeois case, the proposed representative, a Quebec resident, is seeking authorization to institute a class action against several companies that develop and market video games with a “loot box” mechanism, which he claims constitutes a form of illegal gaming. Putative class members are not limited to Quebec residents such as himself. Moreover, many of the respondents are foreign companies, and some have no establishment in Quebec. Some of these foreign entities filed a declinatory exception, which the court dismissed. An appeal was filed, which includes arguments that the dismissal of the declinatory exception unduly broadened the definition of “establishment” within the meaning of article 3148 C.C.Q. Will the Court of Appeal give guidelines for determining whether such an issue should be addressed at the authorization stage? We should know soon as the Court of Appeal is expected to render judgment on this matter within the coming months. The appeal was heard on February 2, 2024. In 2023, the Quebec Court of Appeal had closed the door on the use of the guiding principles of procedure to broaden the scope of its jurisdiction.13 Earlier in the year, the British Columbia Court of Appeal had ruled that it had no jurisdiction over a class action relating to misrepresentations made outside its territory for lack of a “real and substantial connection”,14 and the Ontario Superior Court had followed suit.15 Clearly, class action law and private international law continue to cross paths, if not swords. More than 10 years later16 The majority of class actions are settled before they reach the merits. The same cannot be said for the case involving the Lac-Mégantic tragedy, in which the Court of Appeal is slated to hear the case on liability of certain defendant this year. On July 6, 2013, at 1:14 a.m., downtown Lac-Mégantic was set ablaze after a tank car train derailed. Images of the derailment were broadcast around the world. A class action ensued, filed on July 15, 2013. Authorized on June 8, 2015,17 it was joined with two civil suits, one instituted by the Attorney General of Québec [translation] “for all of the damages suffered by the Quebec State as a result of the tragedy,” estimated at over $231,000,000, and the other by a group of insurers.18 These proceedings were also split in order to first address the liability of the defendants Montreal, Maine & Atlantic [MMA] and Canadian Pacific [CP].19 On December 14, 2022, after a 63-day trial, spanning nine months, the Superior Court did not hold CP liable for the derailment, finding only MMA liable.20 Appeals were filed by both sides in January 2023, suspending the continuation of the trial for the remainder of the case.21 As the appeal materials were filed in the fall of 2023, there should be a hearing in 2024. Class counsel or representative’s counsel?22 Are the lawyers of the representative also those of the class? A trial judgment suggests that they should be considered so if it is in the interest of the class. The Court of Appeal will be ruling on this issue. The Court of Appeal may be called on to rule on this recurrent point of contention between lawyers who act mainly for the plaintiffs and those who act mainly for the defendants: does class counsel have a direct relationship with the members of the class, or is their legal relationship thereto contingent on the relationship they have with the representative? Labour law in Canada’s major junior hockey leagues gives the case its backdrop. Around 2020, the parties to three certified class actions, one in Alberta, one in Ontario and one in Quebec,23 agreed to a settlement that included a release. The scope of said release was the stumbling block—the three courts involved refused to approve the transaction and sent the parties back to the drawing board.24 A new release under the same agreement was drawn up in 2023. It was signed by the two representatives of the Quebec class, Lukas Walter and Thomas Gobeil, on May 9 and June 5, 2023. A date was then set for approval. In a surprising turn of events, on June 14, 2023, Walter and Gobeil informed their lawyers that they no longer agreed to the amended transaction, and notices of revocation of mandate were sent out a few days before the scheduled hearing date. Class counsel, claiming the need to safeguard the interests of the class members, asked the Court to reject the notices of revocation.25 The text of article 576 C.C.P. is unequivocal: the court appoints the representative. It is also clear from case law that it is the representative plaintiff who mandates counsel, not the reverse.26 Because the representative plaintiff is entitled to the counsel of his or her choice, like any other litigant, Walter and Gobeil were in principle entitled to revoke the mandates of their lawyers, even though said lawyers had been involved from the outset of the case. The matter complexifies when one considers the interests of the class members, as the trial judge writes: [translation] “Who will act in the case and whom will they be representing?”27 Possibly to assuage both sides, she acknowledged the revocation of mandate, but confirmed that the lawyers would continue to represent the class, stating that they [translation] “must uphold their duty to represent the class and present the terms of the settlement agreement as amended for approval.”28 In other words, she considered that class counsel had a direct relationship with the class. Needless to say, the case was appealed. The hearing on leave to appeal took place on February 29, 2024. Price higher than advertised: where’s the harm? What burden is imposed on plaintiffs who wish to institute proceedings under section 224(c) of the Consumer Protection Act, prohibiting the practice of hidden charges or drip pricing? A trial judgment states that the mere finding of a prohibited practice is not sufficient to prove actual harm. For the first time in reported case law, the Court of Appeal will consider a judgment on the merits dealing with the application of article 224(c) of the Consumer Protection Act. In this case, Union des consommateurs claims that Air Canada, during the first stage of an online ticket purchase process, failed to indicate the amount of taxes, fees, charges and surcharges included in the final price charged, thereby violating applicable legislation. Union des consommateurs is seeking a reduction in the price paid by members of the class corresponding to the sum of the charges, as well as punitive damages of $10 million. The Superior Court found that Air Canada had indeed advertised a price lower than that ultimately charged to class members. This finding of fault, however, did not relieve the plaintiff of the burden of proving actual harm. Because Air Canada demonstrated that there were clearly visible warnings that the advertised prices did not include all of the fees charged, the Court concluded that the prohibited practice was not likely to influence the formation of the contract.29 Since no harm has been demonstrated, no compensatory damages were awarded. As for punitive damages, the evidence did not show that Air Canada had engaged in “conduct […] which display[ed] ignorance, carelessness or serious negligence”. Moreover, Air Canada had ceased engaging in the contentious practice before the class action was authorized. The appeal was lodged on December 28, 2022, and should be heard this year. The upcoming decision will have a significant impact on a number of ongoing class actions under section 224(c) CPA. The decision will certainly shed some interesting light on the required proof of actual harm and the impact of the prohibited practice on consumers’ purchasing decisions. Devaluation of taxi licenses Will the Superior Court find that by adopting the Act respecting remunerated passenger transportation by automobile,30 the Quebec government expropriated taxi owners without paying fair and reasonable compensation? From April 1 to 24, 2024, the Superior Court will hear a class action on the revenue decline in the taxi industry attributed to the arrival of Uber, an online transportation platform having transformed the urban travel landscape by connecting users with independent drivers via a mobile app. The class action was authorized in 2018.31 The representative, who holds a taxi license, represents a group of taxi drivers and owners. He alleges that his loss of income and the depreciation in the value of his permits were caused by the legislator’s authorization of Uber’s business activities. He argues that the exemption provided to Uber by the law relative to taxi permit fees and the non-regulation of fares for its drivers have enabled Uber to charge far lower fares than those that regulated taxi operators charge. In this case, it will be interesting to see whether the Superior Court will apply the foundations of expropriation law to the class, which establish that no expropriation can take place without compensation for property rights. Member participation and class counsel’s fee to impose conditions relating to class counsel’s fees Can the Court make the full payment of the plaintiff’s lawyer fees contingent on achieving a certain level of participation of members of the class, even though it has already held that the fees agreed to in the settlement agreement were reasonable? Following the authorization of a class action on the false or misleading use of the word “champagne” by an airline that rather served a sparkling wine,32 the parties agreed to a settlement awarding the class members a 7% discount on their next purchase to be made within the next three years, without any restrictions. The settlement also provided for the payment of $1,500,000 to the class counsel, the reimbursement of expert fees and an envelope of up to $20,000 to maximize the settlement’s visibility on social media, without affecting the 7% compensation offered to members. The judgment approving the settlement authorizes the immediate payment of $751,450 to class counsel but makes payment of the balance conditional on achieving a participation rate of 50% of members, or 469,398 claims.33 The plaintiff applied for and obtained leave to appeal the decision.34 He also applied for the revocation, rectification and clarification of the judgment, in particular on the grounds that, under article 593 C.C.P., final payment of professional fees cannot be made conditional on achieving a recovery rate, and that the 50% rate is excessive. Only the second ground of the application was allowed, and the 50% participation rate was reduced to 10%, or 93,880 claims.35 The plaintiff has appealed this second decision. The judgment granting him leave to do so has been joined to the two appeals,36 and the factums are slated to be submitted in 2024. A number of decisions have already suggested that there needs to be a correlation between the professional fees of class counsel and participation of members in the benefits negotiated for them.37 The Court of Appeal’s upcoming ruling is certain to have significant implications on future settlements, and it will provide an interesting perspective on the discretionary power of trial judges to impose conditions relating to plaintiffs’ lawyers’ fees. Greenwashing: can a class action help the environment? Will the Superior Court authorize a class action on a misrepresentation that certain bags are recyclable?38 Does consumer law provide an entry for asking the courts to address environmental concerns? In recent years, many businesses have adopted environmental, social and governance practices (better known by the acronym ESG), often specifically performance criteria in these areas. However, some observers question the sincerity of these actions and sometimes consider them to be public relations schemes rather than genuine efforts on the part of businesses to reduce their environmental footprint or improve their social impact. This context will make it interesting to follow the progress of a class action on misleading representations concerning bags, which a number of superstores present as “recyclable,” when in fact they are only reusable as they are discarded by recycling plants in Quebec. If this class action is authorized, it could pave the way for further similar actions. Businesses that have adopted ESG practices and have made their commitment public should pay attention to the outcome of this case. SBC 2018, c 35. Tobacco Damages and Health Care Costs Recovery Act, SBC 2000, c. 30. British Columbia v. Imperial Tobacco Ltd, 2005 SCC 49. Sandoz Canada Inc. v. British Columbia, 2023 BCCA 306, para. 2. British Columbia v. Apotex Inc., 2022 BCSC 2147. Sandoz Canada Inc. v. British Columbia, 2023 BCCA 306. Sandoz Canada Inc. v. British Columbia, 2023 BCCA 306, para. 3. Québec being the last one with the Opioid-related Damages and Health Care Costs Recovery Act, SQ 2023, c 25, having been assented to and having come into force on November 2, 2023. Sanis Health Inc. v. British Columbia, SCC 40864 (November 9, 2023). Of the initial thirty-four defendants, a certain number agreed to settle out of court. Lavery, de Billy represents one of these defendants. Bank of Montreal v. Marcotte, 2014 SCC 55, para. 43. Bourgeois c. Electronics Arts Inc., 2023 QCCS 1011, leave to appeal granted: Electronics Arts Inc. c. Bourgeois, 2023 QCCA 826, only judge. Otsuka Pharmaceutical Company Limited c. Pohoresky, 2022 QCCA 1230, leave to appeal denied: SCC 40452 (May 25, 2023). Hershey Company v. Leaf, 2023 BCCA 264. Gebien v. Apotex Inc., 2023 ONSC 6792. Lavery, de Billy represented one of the defendants between 2013 and 2016. Ouellet c. Rail World inc., 2015 QCCS 2002, amended by Ouellet c. Canadian Pacific Railway Company, 2016 QCCS 5087. Ouellet c. Compagnie de chemin de fer Canadien Pacifique, 2017 QCCS 5674. Two other civil cases were suspended in the wake of these three cases, one by the same judgment, the other by 9020-1468 Québec inc. c. Canadian Pacific Railway Company, 2019 QCCS 366. Ouellet c. Compagnie de chemin de fer Canadien Pacifique, 2017 QCCS 5674. Ouellet c. Compagnie de chemin de fer Canadien Pacifique, 2022 QCCS 4643. Since June 30, 2023 article 211 C.C.P. prohibits the immediate appeal of a judgment rendered in a split proceeding that does not terminate the proceeding; there was therefore no reason to consider the consequences of possible asymmetry in res judicata in the case of a judgment that only partially puts an end to such a proceeding. Walter c. Quebec Major Junior Hockey League Inc., 2023 QCCS 3655. Walter v. Western Hockey league, 2017 ABQB 382; Berg v. Canadian Hockey League, 2017 ONSC 2608 and Walter c. Quebec Major Junior Hockey League Inc., 2019 QCCS 2334. Walter c. Western Hockey League, 2020 ABQB 631; Berg v. Canadian Hockey League, 2020 ONSC 6389 and Walter c. Ligue de hockey junior majeur du Québec Inc. 2020 QCCS 3724. Walter c. Quebec Major Junior Hockey League Inc., 2023 QCCS 3655, para. 13. Deraspe c. Zinc électrolytique du Canada ltée, 2018 QCCA 256, paras. 38 et s. Walter c. Quebec Major Junior Hockey League Inc., 2023 QCCS 3655, para. 23. Walter c. Quebec Major Junior Hockey League Inc., 2023 QCCS 3655, para. 24. Union des consommateurs c. Air Canada, 2022 QCCS 4254, para. 113, quoting to Richard v. Time Inc., 2012 SCC 8, para. 125. Act respecting remunerated passenger transportation by automobile, CQLR c. T-11.2. Metellus c. Procureure générale du Québec, 2018 QCCS 4626. Macduff c. Vacances Sunwing inc., 2018 QCCS 1510. MacDuff c. Vacances Sunwing inc., 2023 QCCS 343. MacDuff c. Vacances Sunwing inc.,2023 QCCA 476, only judge. MacDuff c. Vacances Sunwing inc., 2023 QCCS 4125. MacDuff c. Vacances Sunwing inc., 2024 QCCA 61, only judge. E.g., Daunais c. Honda Canada inc., 2022 QCCS 2485, paras. 132–133. Cohen c. Dollarama et al., SC 500-06-001200-225.

On January 30, 2023, the Court of Appeal of Quebec rendered a decision in Commission scolaire De La Jonquière c. Intact Compagnie d’assurance.1 The key issues in this case are the potential for conflicts arising from liability insurance policies and the obligation to disclose documents where insurers’ duty to defend conflicts with their duty to indemnify insureds. The facts This case is part of a class action in which all Quebec school boards—now referred to as school service centres (SSCs)—were accused of violating the right to free elementary and secondary education. As part of this class action, the SSCs brought an action in warranty against their insurers, seeking compensation for any amount they may be required to pay. The insurers acknowledged their obligation to defend the appellants in the main proceedings; however, they argued that the claim was not covered by the insurance contract. Following negotiations, the parties to the class action reached a settlement. The action in warranty against the insurers is still pending. At the examination for discovery stage of the action in warranty, the insurers asked to obtain a copy of all communications exchanged between the appellants and their counsel since the beginning of the main proceedings. The SSCs objected to this request on the basis of professional secrecy and litigation privilege. The Court therefore had to rule on the merits of the objection. The trial Drawing on the decision in Domtar2, the Superior Court dismissed the SSCs’ objection, holding that they had waived their right to assert solicitor-client privilege regarding anything relating to the reasonableness of the settlement. It appears that the Court inferred this waiver from certain allegations made and from the disclosure of certain documents as part of the action in warranty. The Court concluded that the appellants had to provide the insurers with the documents, risk analyses, letters, exchanges with the appellants and expert opinions having related to the reasonableness of the settlement since the beginning of the main proceedings. However, according to the Court of Appeal, the Court failed to provide a framework for such disclosure of information and to grant the SSCs the right to raise new objections in relation to said documents. The appeal The Court of Appeal considered the conflicts that may arise from the dual responsibility of insurers: their duty to defend insureds and their duty to indemnify them. In this regard, it described liability insurers and their role as follows: [20] The liability insurer is effectively a two-headed hydra: A type of two-headed creature with a single corporate identity, but where one head handles the insured’s defence and the other protects the insurer’s financial interests by ensuring that it only pays out for covered losses.[21] Each head must base its decisions on the interest it is defending and the information available to it. The two heads must remain separate in order to give effect to the insurance contract. […] The risk of a conflict of interest is therefore very real, which is why the insurer must put measures in place to ensure that it complies with the coverage provided by the policy, while also ensuring the full and complete defence of the insured.] As for the ethical obligations of the lawyer mandated by the insurer to represent the insured, the Court stated that the lawyer becomes the insured’s counsel in all respects and owes the insured absolute loyalty. As such, the right to professional secrecy in the insured’s relationship with the lawyer can be set up against the insurer. That being said, the lawyer must report on the progress of the case to the head of the hydra handling the insured’s defence. The Court then stated that it was essential in this context that the information thus obtained be accessible only to that head, and that the insurer put in place the necessary measures to keep the two heads separate. The Court of Appeal found that the trial judge did not err in concluding that the SSCs were required to provide the evidence necessary to examine the reasonableness of the settlement reached with the insurers. However, in order to do so, an exemption mechanism could be implemented, giving the SSCs the possibility to object to the disclosure of certain information. The Court also confirmed that there was no basis for concluding that the appellants had waived solicitor-client or litigation privilege with respect to all of their exchanges with their counsel. This information must remain protected by professional secrecy and therefore cannot be disclosed to the person at the insurer’s office in charge of the compensation file. The same goes for the accounts for fees, reports, opinions and other documents sent to the person at the insurer’s office handling the defence, unless the insured waives this right. Conclusion This case highlights the conflicts that can arise from the duality of insurers’ responsibilities and the distinction between insurers’ obligation to defend insureds and their obligation to indemnify them. Although the Court ruled that evidence aimed at verifying the reasonableness of a settlement from a qualitative and quantitative standpoint should be disclosed, it concluded that certain information and documents that are strictly relevant to insureds’ defence need not be disclosed. In so doing, it reiterated insurers’ dual responsibility and the importance of keeping the two heads separate when an insurer agrees to take on an insured’s defence, but maintained its refusal to indemnify the insured. Commission scolaire De La Jonquière c. Intact Compagnie d’assurance, 2023 QCCA 124. Chubb Insurance company of Canada c. Domtar, 2017 QCCA 1004.

On March 26, 2021, the Superior Court rendered a decision dismissing a class action against the Investment Industry Regulatory Organization of Canada (“IIROC”) on the loss of personal information of thousands of Canadian investors.1 The lack of evidence of compensable injury and IIROC’s diligent behaviour are the main reasons for the dismissal of the class action. The Facts On February 22, 2013, an inspector working for IIROC forgot his laptop computer in a public place. The computer, which contained the personal information of approximately 50,000 Canadians, was never found. The information had originally been collected by various securities brokers who were under inspection by IIROC. Mr. Lamoureux, whose personal information was on the computer, brought a class action on behalf of all persons whose personal information was lost in the incident. He claimed compensatory damages for the stress, anxiety and worries associated with the loss of personal information, as well as compensation for the injury associated with the identity theft or attempted identity theft of members. He also claimed punitive damages for unlawful and intentional infringement of the right to privacy protected by the Quebec Charter of Human Rights and Freedoms. On this point, the members claimed that IIROC had been reckless and had delayed in notifying affected persons and brokers, as well as relevant authorities. Decision The class action is dismissed in its entirety. Compensatory damages The Superior Court started by acknowledging IIROC’s admission that it was at fault for the loss of the computer, and that the computer was not encrypted as it should have been to comply with IIROC policies. With respect to compensatory damages, the Court reiterated the principle according to which the existence of fault does not presume the existence of injury; each case must be analyzed on the basis of the evidence.2 In this case, the injury alleged by the members can be summarized as follows: They suffered worry, anger, stress and anxiety about the incident. They were forced to monitor their financial accounts, and in particular their credit cards and bank accounts. They were inconvenienced and wasted time in having to deal with credit agencies and ensuring that their personal information was protected. They felt shame and suffered delays caused by identity checks on their credit applications attributable to flags on their files. In its analysis, the Court held that, apart from the fact that the members were generally troubled by the loss of their personal information, there was no evidence of any particular and significant difficulties related to their mental state. Relying on Mustapha v. Culligan of Canada Ltd.,3 the Court reiterated that “the law does not recognize upset, disgust, anxiety, agitation or other mental states that fall short of injury.” If the injury is not serious and prolonged, and is limited to ordinary discomforts and fears that are inherent to life in society, it does not constitute compensable injury. In this case, the Court found that the negative feelings experienced as a result of the loss of personal information did not rise above the level of ordinary discomforts, anxieties and fears that people living in society routinely accept. Having to monitor one’s personal accounts more closely does not qualify as a compensable injury, as the courts equate this practice with that of [translation] “a reasonable person who protects their assets.”4 The Court also considered the fact that IIROC provided members with free credit monitoring and protection services. It thus concluded that, in this respect, there was no injury to compensate. Finally, the experts who were mandated to analyze the circumstances and wrongful use of the investors’ personal information found that there was no clear indication of wrongful use of the information by a person or group of persons, although evidence of wrongful use of personal information is not necessary to assert a claim. Punitive damages The plaintiff, on behalf of the members of the class action, also sought punitive damages on the grounds that IIROC had been reckless in its handling of the incident. To analyze IIROC’s diligence, the Court noted the following facts.  IIROC launched an internal investigation in the week that followed that of February 22, 2013, the date on which the computer was lost. On March 4, 2013, the investigation revealed that the computer likely contained the personal information of thousands of Canadians. IIROC filed a police report. On March 6, 2013, it mandated Deloitte to identify what personal information was lost and who were the affected persons and brokerage firms, and to help it manage the risks and obligations associated with the loss of the personal information. On March 22, 2013, Deloitte informed IIROC that the computer contained “highly sensitive” and “increased sensitivity” information about thousands of Canadian investors. On March 27, 2013, IIROC notified the Commission d’accès à l’information du Québec and the Office of the Privacy Commissioner of Canada. On April 8 and 9, 2013, IIROC met with representatives of the affected brokerage firms, and simultaneously mandated credit agencies to implement safeguards for investors and brokerage firms. IIROC also set up a bilingual call center, issued a press release about the loss of the computer and sent a letter to affected investors. The Court also accepted expert evidence according to which IIROC’s response was consistent with industry best practices, and that the measures put in place were appropriate in the circumstances and consistent with other responses to similar incidents. In light of the evidence, the Court concluded that the loss of the unencrypted laptop computer and the resulting violation of the right to privacy were isolated and unintentional. It therefore dismissed the claim for punitive damages. The outcome is that IIROC was not reckless: it rather acted in a timely manner. Comments This decision introduces a basis for analyzing the diligent conduct of a company should the personal information that it holds be compromised, and confirms that a prompt and diligent response to a security incident can safeguard against a civil suit. It also confirms that the mere loss of personal information, no matter how sensitive, is not in itself sufficient to justify financial compensation, and that it must be proven that injury was suffered. Furthermore, ordinary annoyances and temporary inconveniences do not constitute compensable injury, and monitoring financial accounts is not exceptional, but is rather considered the standard practice expected of a reasonable person protecting their assets. At the time of writing this bulletin, the time limit for appeal has not expired and the plaintiff has not announced whether he intends to appeal the judgment. Lamoureux v. Organisme canadien de réglementation du commerce des valeurs mobilières (OCRCVM), 2021 QCCS 1093. Sofio v. Organisme canadien de réglementation du commerce des valeurs mobilières (OCRCVM), 2014 QCCS 4061, paras. 21 and 22. Mustapha v. Culligan of Canada Ltd., 2008 SCC 27 [2008] 2 SCR 114. Lamoureux v. Organisme canadien de réglementation du commerce des valeurs mobilières, 2021 QCCS 1093, para. 73.

Is an event organizer responsible for an artist’s late appearance? Context is key, answers the Superior Court’s, as it dismisses the application for authorization to institute a class action against Gestion Evenko Inc.1 regarding Travis Scott’s late appearance at the Osheaga Music and Arts Festival in the summer of 2018. Overview of the first class action on this topic in Quebec. Background The Osheaga Festival, organized by the defendant, Evenko, is a huge celebration dedicated to music and visual arts where artists of all genres perform for three days on the many outdoor stages set up in Parc Jean-Drapeau on Notre-Dame Island. Rapper Travis Scott was on the lineup for the evening of August 3, 2018. His performance was scheduled from 9:45 p.m. to 10:55 p.m. on the River stage. Wishing to attend this performance, the plaintiff, who had purchased a weekend pass, went to the venue at 8:45 p.m. Unfortunately, Travis Scott was held up at customs that evening. The sequence of events can be summarized as follows. At 9:55 p.m., Evenko displayed a first message on the site’s giant screens indicating that the show was delayed for a reason beyond its control. At 10:15 p.m., Evenko broadcast a second message, both on the giant screens and on Twitter, indicating that Travis Scott had been delayed at customs and was on his way to Notre-Dame Island. At 10:30 p.m., the plaintiff left the premises; she claimed that she did not believe Evenko's messages, feared a curfew and found the crowd aggressive. At 10:40 p.m., Evenko broadcast a third message on the giant screens confirming that Travis Scott had arrived on the island. At 10:55 p.m., Evenko broadcast a fourth message announcing to festival-goers that the show was about to begin. The show started at 11:00 p.m. and ended around 11:40 p.m. An application for authorization to institute a class action was filed the next day. The plaintiff sought to represent nearly 50,000 festival-goers who, in her opinion, suffered prejudice attributable to Evenko. She claimed that Travis Scott’s 90-minute delay constituted a breach of contract by Evenko such that all members of the group should obtain a refund equivalent to the value of a daily pass. The Decision In carrying out the analysis required by section 575 of the C.C.P., Justice André Prévost concluded that the alleged facts did not appear to justify the conclusions sought. The application for authorization to institute a class action was therefore dismissed. From the outset, the Court questioned some of the allegations in the application: for example, the plaintiff’s assertion that [translation] “Travis Scott’s performance was the main consideration in the contract with Evenko” seems incompatible with the fact that she purchased a three-day pass (paras. 51, 56); similarly, there was no evidence to support her claim that the crowd was aggressive (para. 54). However, it is mainly two deficiencies in the legal syllogism that led the Court to conclude that the application for authorization did not establish an arguable case or a reasonable prospect of success (para. 66). First, the Court refused to reduce the Osheaga Festival experience to a single performance, even that of a headliner. Rather, it described the event as [translation] “a comprehensive experience [...] whose interest lies in the multiplicity and simultaneity of cultural experiences” (para. 48). In fact, in addition to the invited musical, cultural and circus artists, there are various activities, fairs, cruises and awards ceremonies, to name but a few (para. 48). The Court pointed out that all documents relating to Osheaga’s programming and schedule contain one or more of the following warnings: “Schedule and lineup subject to change” or “Artists and schedule subject to change” (para. 47). These warnings are a strong indication that such delays are far from unusual or, in the words of the Court, [translation] “this is not exceptional for those acquainted with the cultural milieu” (para. 57). In this context, Evenko cannot be found to be at fault. The Court continued its analysis, adding that, even if it were found to be at fault, which is not the case, the situation did not result in any compensable damage: Citing Sofio2 and Mustapha3, the Court pointed out that mere annoyance is not prejudice, and that, in fact, [translation] “there is no evidence that Travis Scott’s delayed performance caused a more serious inconvenience than what is usual for people attending festivals of this nature” (para. 65). In short, in the context of a multi-genre festival, an artist appearing late does not necessarily constitute compensable prejudice and does not automatically amount to the promoter’s failure to fulfil its obligations. What It Means The decision is important to the entertainment industry in that it recognizes that major event organizers sometimes deal with unforeseen circumstances and they are allowed reasonable leeway to adapt to them. Of course, each situation will be particular, but a well-informed promoter will make sure to indicate that changes are possible in its documentation. The decision also recognizes that a comprehensive cultural experience is more than the sum of its parts: a single artist appearing late does not cast a pall on the entire event. This conclusion is likely to apply to many other industries: Osheaga is a typical example of a set of distinct and simultaneous performances, but the same characterization can be given to all the rides in an amusement park or all the individual sections of a zoological garden. Our partners, Myriam Brixi and Laurence Bich-Carrière have successfully represented Evenko's interests in this case.   Le Stum c. Gestion Evenko inc., 2019 QCCS 2422. The time limit for appeal expired on July 22, 2019. Sofio c. Organisme canadien de réglementation du commerce des valeurs mobilières (OCRCVM), 2015 QCCA 1820. Mustapha v. Culligan of Canada Ltd., [2008] 2 SCR 114, 2008 SCC 27.

The Superior Court of Québec dismissed an application for authorization to institute a class action against Yahoo! Inc.1 (hereinafter “Yahoo!”) seeking damages as a result of cyberattacks that compromised the confidentiality of user data. Context In September 2016, Yahoo! issued a press release announcing that nearly 500 million users were reportedly victims of a cyberattack in 2014. In December 2016, the company informed its users of another cyberattack that it claims took place in 2013. In February 2017, users were informed that the use of cookies apparently allowed a third party to access information contained in their accounts between 2015 and 2016. While a class action was brought in Ontario in December 2016, an application for authorization to institute a class action was filed in Québec the following month seeking compensation for users who were victims of one or more of these cyberattacks. The decision No arguable case After limiting the class to Québec residents whose information was lost and/or stolen between 2013 and 2019, the Court addressed the test set forth in paragraph 2 of article 575 of the Code of Civil Procedure. According to this criterion, the plaintiff must demonstrate that the alleged facts appear to justify the conclusions sought. The Court must distinguish factual allegations from arguments, opinions, unsupported inferences and hypotheses, as well as assertions that are implausible or false. This analysis is carried out in light of the plaintiff’s cause of action. In this case, the plaintiff had a Yahoo! email account. She alleged having suffered harm because her account may have been hacked during the 2013 cyberattack, although the nature of the compromised information is not yet known. She added that she suffered additional harm due to the “imminent” and “certainly impending” threat of identity theft and fraud resulting from the sale of her information on the black market and its use by criminals. She was also embarrassed because some of her friends received spam emails from her account in her name. As a result, she must now take steps to protect her personal and financial information. Building on the principles set out in the Sofio2 and Mustapha3 decisions, the Court reiterated that the demonstration of an alleged fault does not presuppose the existence of prejudice and that the latter must be serious and prolonged. Embarrassment and temporary inconveniences of an ordinary nature do not constitute compensable damages. Contrary to the allegations in the application, the Court considered that the plaintiff’s answers during her examination demonstrated that she has no reason to believe that she was a victim of identity theft or fraud, since she did not identify any suspicious charges and did not receive a poor credit report. In addition, she continued to use her Yahoo! account and admitted that she did not purchase any identity protection services, such as credit monitoring. Thus, the only prejudice the plaintiff suffered is the fact that she had to change her passwords for all of the accounts associated with her Yahoo! email address and the embarrassment she suffered because of the spam emails that were sent to her friends. On this point, the Court noted that none of the spam emails were filed into the Court record and that none of the recipients of the spam emails suffered harm. Consequently, the Court concluded that the plaintiff had not demonstrated the existence of an arguable cause. The Court distinguished the facts in this case from those in Zuckerman4 and Belley5, in which the plaintiffs had incurred expenses to protect their information or had been victims of fraud or identity theft. Inadequate representation Adequate representation implies that the representative plaintiff has a valid personal cause of action. However, a civil liability action requires the demonstration of a legal basis for the claim of damages, which was not achieved in this case. To summarize: It is not enough to claim the existence of a fault: damage must result therefrom. The notion of “compensable harm” must go beyond mere annoyance. Conclusion Legal action brought as a result of data breaches has increased exponentially in recent years. Cybercrime has become the second most common type of financial fraud. Any company that retains client data should be aware of the risks associated with cyberattacks and the potential lawsuits. To minimize risks, several measures can be implemented, such as adopting a response plan for cyberattacks, training employees and regularly updating security measures. For example, the PCI DSS (Payment Card Industry Data Security Standard) provides a detailed framework that allows companies to implement secure transaction processes. It is recommended that companies consult an IT specialist or hire an internal expert for guidance. It is also recommended that companies contact their insurers to verify their insurance policy coverage and, if necessary, obtain cyber risk insurance coverage. For class action practitioners, this decision once again demonstrates the importance of bearing in mind the impact that the examination of the representative plaintiff could have on the outcome of a case.   Bourbonnière v. Yahoo! Inc., 2019 QCCS 2624. Sofio c. Organisme canadien de réglementation du commerce des valeurs mobilières (OCRCVM), 2015 QCCA 1820. Mustapha v. Culligan of Canada Ltd., 2008 SCC 27. Zukerman v. Target Corporation, 2015 QCCA 1809. Belley v. TD Auto Finance Services Inc./Services de financement auto TD inc., 2015 QCCS 168/2015 QCCA 1255.

This publication was authored by Luc Thibaudeau, former partner of Lavery and now judge in the Civil Division of the Court of Québec, District of Longueuil. Consumer law and class action suits go well together. In the recent Girard1decision, the Quebec Court of Appeal, in an opinion by the honourable Jacques Dufresne, noted certain principles that should guide the courts of first instance in the factual analysis of a consumer law case. In so doing, the Court of Appeal is reviewing the lessons of the Supreme Court of Canada in Time2 and applying them in the context of a class action. THE ABSOLUTE PRESUMPTION OF PREJUDICE The Time decision was related to an individual recourse brought by Mr. Jean-Marc Richard on the basis of misrepresentation for an announcement by Time that he had won sweepstakes in which he had not participated. In that case, which involved a violation of the Consumer Protection Act3, the Supreme Court set out four criteria for determining whether a consumer could benefit from an absolute presumption of prejudice and, therefore, from one of the remedies provided for in section 272 of the CPA: [Official English version] that the merchant or manufacturer failed to fulfil one of the obligations imposed by Title II of the Act;  the consumer saw the representation that constituted a prohibited practice; the consumer’s seeing that representation resulted in the formation, amendment or performance of a consumer contract; a sufficient nexus existed between the content of the representation and the goods or services covered by the contract.4 The Girard case, for its part, was brought as a class action based on misrepresentations as to the calculation of a rebate offered by a provider of cable television, Internet and telephone services. Specifically, Mr. Girard criticized the service provider for not having disclosed a 1.5% fee payable to the Local Program Improvement Fund (LPIF) to its subscribers and for having miscalculated that fee.5 The Superior Court allowed the class action and ordered the service provider to pay members of the group nearly $6.5 million in compensatory damages and $1 million in punitive damages. The service provider appealed. Specifically, the judge of first instance found that she did not have to resort to the irrebuttable presumption of prejudice set out in Time, since it was clear that the consumer had suffered prejudice. For judge Dufresne, this constituted an error, but not one that justified the intervention of the Court of Appeal: [Translation] In fact, had she conducted an examination of the four criteria set out in the Time decision, she would nevertheless have concluded that the appellant should be ordered to reimburse the LPIF costs paid by its subscribers, members of the Group, beyond the actual cost of their cable television package.6 Regarding the first criterion of the analytical framework, the Court of Appeal opined that the members of the group had been victims of a business practice prohibited by the Consumer Protection Act due to the erroneous calculation of fees payable to the LPIF. Regarding the second criterion of the analytical framework, namely the awareness of the misrepresentation, judge Dufresne stressed that the members of the group had not been informed of the existence of the fees at the time the contract was made, nor of their method of calculation, the contract, as well as the invoice, being silent on this last point7. The second criterion of the Time decision was thus satisfied. We must conclude that the second criterion can be applied to an omission by the merchant, in the present case that of failing to disclose the method of calculation. The third criterion was not the subject of argument before the Court of Appeal. As for the fourth criterion —that of sufficient nexus— the service provider argued that Mr. Girard had admitted in his testimony that he would have entered into the contract even if he had known that the LPIF fees had been erroneously calculated and that the situation did not present [official English version] “sufficient nexus between the content of the representation [engaging in a prohibited business practice] and the goods or services covered by the contract”8 required by the Time decision. According to this fourth criterion, [official English version] “the prohibited practice must be one that was capable of influencing a consumer’s behaviour with respect to the formation [...] of the contract”9. Because Mr. Girard admitted that he would have entered into the contract anyway, one might think that the failure to reveal the method of calculating the LPIF would not have had any bearing on the formation of the contract. However, judge Dufresne does not hold with this argument: [72] [translation] [...] The misrepresentations, meaning the failure to disclose the method of calculation used and its repercussions, namely the act of collecting more from the respondents than the appellant itself pays to the CRTC for the LPIF, were capable of influencing their decision to contract with the appellant for its cable television services according to the terms and conditions on which they actually contracted.10 Thus, according to this excerpt, one might think that the fourth element of the analytical framework should be applied objectively. This approach stems from the Supreme Court’s use of the wording [official English version] “must be [...] capable of influencing a consumer’s behaviour”11.  The Court of Appeal suggests here that the evaluation of the fourth element of the Time analytical framework must be objective, considering in particular the wording “must be capable” used by the Supreme Court. Yet, in its decision in the Dion case rendered in 2015, another panel of the Court of Appeal adopted a subjective approach, in concreto: [85] The judge in first instance correctly applied the aforementioned to the instant case when she held that the last criterion had not been satisfied given the stipulation that the Consumers would have purchased or leased a vehicle had the charge in question been itemized or broken down. There was, accordingly, no nexus between the prohibited practice and the Consumers’ behaviour. The Consumers’ decision to pay the amount of the charge or to “perform the contract” was not influenced by the prohibited practice. Thus, there was no presumption of prejudice. 12 This question may deserve to be revisited. It is true that an objective approach benefits consumers in that it reduces their burden of proof. However, it seems that the subject of the third criterion of the Time analytical framework argues in favour of a more factual, more concrete approach. That is what is stated in the (original) English version of justice Cromwell’s reasoning in Time: “that the consumer’s seeing that representation resulted in the formation [...] of the consumer contract”13. The use of this concept of “result” suggests to the decider to proceed in a subjective manner to an analysis of the facts of the case. With respect to the fourth criterion, the English version of the decision is also telling: “a sufficient nexus existed between the content of the representation and the goods or services covered by the contract”14. This concept of “existence” also invites to proceed with a subjective analysis. Consumer law cases must be decided in accordance with the rules of civil law. This is moreover one of the lessons from Time15. A subjective approach appears more compatible with the general principles of civil law according to which a sufficient causal connection is necessary to establish the existence of a cause of action. AWARD OF PUNITIVE DAMAGES Another important aspect of the Court of Appeal’s decision on Girard is the “punitive damages” component. Remember that at the court of first instance, the first judge had granted an award of punitive damages of one million dollars in addition to a monetary award of more than six million dollars. On appeal, the Court of Appeal reduced this award to $200,000. Relying once again on the Time decision, judge Dufresne noted certain principles that must guide the court when awarding punitive damages:  [210] [Official English version] Where a court decides to award punitive damages, it must relate the facts of the case before it to the objectives that underlie such damages and ask itself how, in this particular case, awarding them would further those objectives. It must try to fix the most appropriate amount, that is, the lowest amount that would serve the purpose.16 (emphasis added). Then: [Official English version] Having regard to this objective and the objectives of the C.P.A., violations by merchants or manufacturers that are intentional, malicious or vexatious, and conduct on their part in which they display ignorance, carelessness or serious negligence with respect to their obligations and consumers’ rights under the C.P.A. may result in awards of punitive damages. However, before awarding such damages, the court must consider the whole of the merchant’s conduct at the time of and after the violations.17 Judge Dufresne recognizes that these principles argue in favour of an award of punitive damages as a remedy for the violation of the C.P.A. However, he considers the amount of one million dollars to go far beyond what is indicated by the circumstances to satisfy the objectives of the Act18. He also reiterates that the amount of punitive damages awarded, while being sufficient to serve the preventive function of the C.P.A., must be proportional to the seriousness of the alleged breaches19. However, all these factors being taken into consideration, the seriousness of the alleged breach is the most important20. On this point, judge Dufresne considers that, while not trivial, the seriousness of the C.P.A. violation should be put into perspective. He considers that the award of over six million dollars in compensatory damages carries a significant punitive effect and surely serves as a deterrent. In this sense, judge Dufresne considers that the decision of the Superior Court does not adequately assess the behaviour of the service provider before, during and after the violation of C.P.A. Even if the service provider’s defense proved to be unfounded, it did not amount to an abusive practice21. This intervention by the Court of Appeal in determining the amount of punitive damages could be characterized as exceptional. In Time, the Supreme Court recognized a certain discretion by the court of first instance in the award of -punitive damages: [Official English version] “[i]t should be borne in mind that a trial court has latitude in determining the quantum of punitive damages, provided that the amount it awards remains within rational limits in light of the specific circumstances of the case before it”22. This discretion, however, seems limited and must respect the duty of restraint of the judge who grants punitive damages. The Girard decision thus confirms the exceptional nature of the punitive damages, as recognized by the Supreme Court in Time23, and the need in consumer law for such damages to be justified in the general context of attaining the objectives of the Consumer Protection Act, namely (1) the restoration of an equilibrium in contractual relations between merchants and consumers and (2) the elimination of unfair practices that could distort the information available to the consumer and prevent him from making informed choices24. CONCLUSION The Court of Appeal’s decision in Girard will likely become the topic of much discussion. Consumer law is an area particularly conducive to class action suits and the four-part test set out in the Time decision to determine the applicability of the absolute presumption of prejudice will surely be used again by the courts in the near future. The question of whether the analytical criteria should be assessed objectively or subjectively certainly deserves to be discussed in greater depth. This question is of particular interest in the context of class actions. With respect to the "punitive damages" component of the decision, it appears that the decision in first instance is one of the rare cases where the Supreme Court accepts that an appellate court may review a first instance decision to award such damages. Justice Cromwell wrote in Time: [Official English version] “[a]n assessment will be wholly erroneous if it is established that the trial court clearly erred in exercising its discretion, that is, if the amount awarded was not rationally connected to the purposes being pursued in awarding punitive damages in the case before the court”25. Considering the Court of Appeal’s intervention in the Girard decision, we may assume that the duty of restraint of the trial judge is central to achieving this objective. The deadline for requesting permission to appeal to the Supreme Court is August 11. So this is a case to follow!   Vidéotron v. Girard, 2018 QCCA 767 (hereinafter: “Girard”). Richard v. Time, 2012 SCC 8 (hereinafter: “Time”). CQLR c. P-40.1 (the “C.P.A.”). Time, para. 124. Girard, para. 13. Girard, para. 48. Girard, paras. 65-66. Time, para. 124; Girard, para. 70. Time, para. 124; Girard, para. 70. Girard, para. 72. (emphasis is added unless indicated otherwise) Time, para. 124. Dion c. Compagnie de services de financement automobile Primus Canada, 2015 QCCA 333, para. 85. Time, para. 124 (emphasis added). ENGLISH VERSION: “that the consumer’s seeing that representation resulted in the formation [...] of [the] contract”. However, the French version reads: “la formation, la modification ou l’exécution d’un contrat de consommation subséquente à cette prise de connaissance” [translation: the formation, modification or execution of a consumer contract following that awareness] (emphasis added). Time, para. 124 (emphasis added). ENGLISH VERSION: “a sufficient nexus existed between the content of the representation and the goods or services covered by the contract”. However, the French version reads: “une proximité suffisante entre le contenu de la représentation et le bien ou le service visé par le contrat” [translation: a sufficient nexus between the content of the representation and the good or service concerned in the contract] (emphasis added). Time, para. 111. Time, paras. 210 & 215; Girard, para. 100. Time, para. 180; Girard, para. 102. Girard, para. 103 Girard, para. 105. Time, para. 190. Girard, para. 111. Time, para. 190. This is consistent with existing case law. See: Banque de Montréal v. Marcotte, [2014] 2 SCR 725, 2014 SCC 55, para. 98; Cinar Corporation v. Robinson, 2013 SCC 73, para. 134; and Dion, paras. 128-129. Time, para. 150. Time, paras. 160-161. See also: Banque de Montréal v. Marcotte, [2014] 2 SCR 725, 2014 SCC 55, para. 55. Time, para. 190.

Many Canadians travel by airline. Aside from the pleasure of travel, certain inconveniences may sometimes occur, for both air carriers and passengers alike. A class action suit is often the preferred procedural vehicle for customers to assert their rights. Recent class actions authorized by the Quebec courts raise interesting issues. The courts will be considering the application of the Convention for the Unification of Certain Rules for International Carriage by Air (the “Montreal Convention”) and of the right of passengers to claim moral damages, as well as the rates and accuracy of pricing under the Canada Transportation Act1 will be a subject of debate. Claims for moral damages Whether moral damages may be recovered pursuant to the Montreal Convention remains a thorny issue and the topic of much judicial discussion. The Court of Appeal decisions in Croteau v. Air Transat AT inc.2 and Plourde v. Service aérien FBO inc. (Sky Service F.B .O. Inc.)3 appeared to have settled the matter. In each of these cases, the Court of Appeal concluded, among other things, that the initial court judge had reason to refuse to authorize the class action with respect to the conclusions whereby class members sought compensation for psychological damage suffered during a flight. Such damage is not compensable pursuant to Article 17 of the Montreal Convention, which establishes the liability of the air carrier in the event of death or bodily injury of passengers. However, these cases did not address the matter of moral damages occasioned by a delay pursuant to Article 19 of the Montreal Convention, which stipulates that the air carrier is liable for damage occasioned by a delay. In 2012, in the matter of Yalaoui v. Air Algérie4, the Superior Court authorized a class action for the members of a group of passengers who were on a direct flight from Algiers to Montréal that had been delayed for approximately 15 hours. More specifically, the members claimed moral damages for the inconveniences occasioned by the delay, pursuant to Article 19 of the Montreal Convention. In 2017, the Superior Court5 dismissed the action on the basis that the air carrier had taken all of the reasonable measures to ensure the proper maintenance and repair of the aircraft, without being able to avoid the delay. The matter of moral damages was, therefore, not addressed. This question of awarding of moral damages recently resurfaced in Auguste v. Air Transat6. The group, composed of more than 120 passenger ticketholders, who were left in Port-au-Prince by the air carrier, received authorization to initiate a class action against the air carrier. The members of the group are claiming, pursuant to Article 19 of the Montreal Convention, moral damages occasioned by a two-day delay. In the same case, the Superior Court7 authorized in 2016 that the notices to the members, who were directed to the Haitian community, be broadcast over the airwaves of a Haitian radio station so as to reach the maximum number of persons. This method of broadcasting the notice is, at first blush, exceptional, yet the Court, using its discretion, was of the opinion that the interest of the members warranted it. The hearing is scheduled to take place in April 2018. Overcharging In 2013, in the case of Chabot v. WestJet,8 a class action was authorized against an air carrier. The members of a group allege that the carrier overcharged them for a companion seat or for a seat adapted to their condition due to a disability or surplus weight. The authorized group was composed of passengers with a functional disability and their travelling companions, which occurred on flights operated by the air carrier since December 5, 2005. The matter is of interest in that it is the result of a decision rendered by the Canadian Transportation Agency. An independent quasi-judicial tribunal and regulator, the Agency has all of the powers of a Superior Court with respect to the exercise of its jurisdiction in connection with national transportation matters. On January 10, 2008, the Agency ruled that air carriers could not demand a fee for additional seats needed to accommodate individuals having certain significant disabilities.9 Thus, in the context of the class action pending before the Superior Court, it must be determined whether the air carrier’s pricing policy is discriminatory or abusive and, if so, whether moral and punitive damages may be awarded. In connection with this same matter, the Court of Appeal10 confirmed in 2016 that the Superior Court had jurisdiction to hear the case, which is based on contractual liability and that, in so doing, it could interpret the Canada Transportation Act11, since the case does not fall within the exclusive jurisdiction of the Canadian Transportation Agency. In 2017, the Superior Court12 split the class into two groups distinguishing between domestic and international travellers. The matter is pending. Still on the subject of overcharging, the authorization to exercise a class action was granted in Choquette v. Air Canada13 for the members of a group who allege having to pay fuel surcharges when purchasing their airline tickets. As in Chabot v. WestJet,14 the Superior Court deemed competent to hear the matter, absent a legal provision granting exclusive jurisdiction to the Canadian Transportation Agency. The proceedings are also ongoing. Accuracy of Prices Finally, the matter of the Union des consommateurs v. Air Canada15 raises the question of the accuracy of the prices advertised by an air carrier. In 2014, the Court of Appeal authorized the exercise of a class action by customers who would have paid a higher price than that which was posted by the air carrier in its ads and on its website. In February 2018, notices to the attorney generals of Quebec and Canada were filed in the court record to challenge the constitutionality of the Consumer Protection Act with regards to travel tickets advertised and sold on an air carrier’s website. The case is ongoing. Several important questions in the context of class action proceedings against air carriers will be considered by the Courts. The answers could impact the rights of customers and air carriers, as well as those of their insurers.   Canada Transportation Act, S.C. 1996, c 10 Croteau v. Air Transat AT Inc., 2007 QCCA 737 Plourde v. Service aérien FBO inc. (Sky Service F.B.O. Inc), 2007 QCCA 739 Yalaoui v. Air Algérie, 2012 QCCS 1393 Yalaoui v. Air Algérie, 2017 QCCS 5479 Auguste v. Air Transat, 2015 QCCS 3923 Auguste v. Air Transat, 2016 QCCS 604 Chabot v. WestJet, 2013, QCCS 5297 Decision no 6— AT-A-2008  WestJet v. Chabot, 2016 QCCA 584; Application for leave to appeal to the Supreme Court of Canada was dismissed WestJet v. Nicole Chabot, in her quality of tutor to her minor child N.C., et al., 2016 CanLII 72704 (SCC)  Canada Transportation Act, S.C. 1996, c. 10  Chabot v. WestJet, 2017 QCCS 4942 Choquette v. Air Canada, 2017 QCCS 234 Westjet v. Chabot, 2016 QCCA 584 Union des consommateurs v. Air Canada, 2014QCCA 523  

Anyone who wants to bring an action in damages relating to the secondary securities market must prove that the action is brought in good faith and has a reasonable chance of success (s. 225.4 QSA). In Quebec,1 as elsewhere in Canada,2 no prior disclosure of evidence may be obtained by plaintiff for the purpose of meeting this burden. The procedure prescribed by the QSA is complete and sufficient, so recourse to the rules Code of Civil Procedure is unwarranted. Where such an action is brought by way of class action, the court must furthermore be convinced that the criteria for authorizing a class action are also met. The Court of Appeal does not expressly rule on whether prior disclosure is available to the investor  to sustain the proposed class action. These specific rules have no impact on the general rules regarding insurance, such as a plaintiff's direct right of action against the insurer of the person who caused the damage (art. 2501 CCQ). Regardless of the subject matter (the secondary market) or the procedural vehicle (class action), a court may order a defendant to disclose such documents which are necessary for a meaningful exercise of this right, such as insurance policies. In its recent decision in Amaya Inc. v. Derome, 2018 QCCA 120, the Court of Appeal ruled on the interaction between the Securities Act, CQLR, c.V-1.1 (QSA) and the rules specific to class actions in relation to applications by investors for prior disclosure of documents by a public issuer. We summarize here a much-anticipated decision. The Specific Framework of the QSA The QSA governs actions relating to financial markets. Although such actions may be introduced on an individual basis, class actions are regarded as the preferred vehicle, “given that publicly-traded issuers generally have many investors in like circumstances and, if something goes wrong, they are likely to come together to avail themselves of the advantages of a class action.”3 Class actions are merely one of the available vehicles, and it is in no way a requirement to use this type of proceeding. With respect to actions relating to the secondary market, section 225.4 QSA requires that any investor, whether acting personally or as representative of a proposed group, be authorized by the court before bringing the proposed action. This restriction was enacted –and similarly so across Canada–4 to preserve public confidence in stock markets,5 but also to protect public issuers against opportunistic actions brought in hopes of obtaining a settlement rather than to obtain compensation for actual damage.6 Accordingly, an investor who claims to have been defrauded will have to prove to the court from which authorization is requested that the proposed action is “in good faith and there is a reasonable possibility that it will be resolved in favour of the plaintiff” (s. 225.4 para. 3 QSA). Motions for authorization should be addressed as early as possible, so that judicial resources are allocated only to meritorious cases. Interaction With Class Actions If the action takes the form of a class action, the investor must also meet the criteria for authorization of a class action (art. 575 CCP), a burden which has been established to be a light one, since it simply involves proving that “the facts alleged appear to justify the conclusions sought” (art. 575(3) CCP).7 Not only do the QSA and the CCP impose different burdens, but the authorization they require arises at different moments in the course of the proceedings o: the authorization required by section 225.4 QSA must, necessarily, precede the authorization required by article 575 CCP. As the Court of Appeal points out: “This is eminently logical: where leave is required under the Act, there is no action upon which the class action, as a procedural vehicle, can rest until that leave is granted.”8 Of course, both issues can be disposed of in one judgment.9 With these distinctions made, it is clear that any application brought for the purpose of enabling an investor to meet the burden established by section 225.4 QSA must be analyzed pursuant to the rules set out in that provision and not the rules that generally apply to class actions.10 The judgment appealed from was therefore not a “pre-authorization class action judgment”; it was a “judgment prior to leave under the [QSA]”.11 Accordingly, it had to be reviewed in accordance with the requirements and the spirit of the QSA.12 The Judgment Under Appeal The trial judge had granted an application for documentary disclosure, relying on the parties’ general duty to cooperate set forth by article 20 of the CCP.13 He thus arrived at a solution that is unique in the Canadian legal landscape.14 Though rendered during a case management conference, the judgment under appeal  went significantly beyond the confines of case management. Accordingly, the application for leave should follow the rules applicable to judgments rendered in the course of proceedings, set out in article 31 para. 2 CCP.15 The trial judge's decision has addressed a point of law regarding to discovery, which impacted “the character of the proceedings themselves,” and which, if decided wrongly could cause irreparable harm to defendant, regardless of the expenses involved.16 Leave was granted and the Court of Appeal had to consider, on the merits, whether the trial judge was correct in applying the general principles of Quebec civil procedure to the applications for documentary disclosure that were before him. For the Code of Civil Procedure to “compensate[e] for the silence of the other laws if the context so admits,” as provided by its preliminary provision, such a silence must exist. In the opinion of the Court of Appeal, considering the purpose and history of section 225.4 QSA – in particular its goal of screening out opportunistic actions as soon as possible17 – and the uniformity of legislation on this subject in Canada,18 no such silence can be found to exist. On the contrary: in order to avoid short-circuiting the requirement for prior authorization and avoid fishing expeditions and mini-trials, judges who are responsible for authorizing actions of this nature must require that applicants meet their burden themselves.19 Neither the combination of articles 20 and 221 CCP or the specific context of class actions can sidestep that prohibition.20 Insofar as it was sought to allow the investor to meet the burden imposed by section 225.4 QSA, the application for documentary disclosure should have been dismissed. By contrast, the application to obtain disclosure of the insurance policies did not fall within the specific context of section 225.4 SA, and the trial judge's order was left undisturbed, Given the principle of cooperation (art. 20 CCP), but most importantly the long-settled principle that a third party seeking to exercise their right of action against the insurer of the person who caused the damage they suffered (art. 2501 CCQ) such applications can be justified in that they allow potential parties to the case to be identified.21 The Court of Appeal’s decision does not directly address whether class counsel may succeed in a request for “relevant evidence to be submitted” within the meaning of article 574 para. 3 CCP; such requests are traditionally considered to be properly made to contest  the application, that is, necessarily by defendant,  given that the allegations in the application for authorization to institute a class action must be assumed to be true at that stage.22 Summary Section 225.4 QSA is the expression, in Quebec law, of an intent common to all Canadian legislatures to create a screening mechanism for actions relating to the secondary market, in order to preserve investor confidence and deter frivolous suits. Accordingly, where an applicant seeks prior disclosure in order to meet the criterion for authorization set out in section 225.4 QSA, his or her application should be dismissed, including in a class action context. Where the objective of the application for prior disclosure is not one germane to the QSA, for instance, where an applicant seeks information to join an insurer to the proceedings, such application needs to be considered under the ordinary rules of Quebec law.   Theratechnologies Inc. v. 121851 Canada inc., [2015] 2 SCR 106, 2015 SCC 18 Canadian Imperial Bank of Commerce v. Green, [2015] 3 SCR 801, 2015 SCC 60 Par. 52 Par. 97 Par. 84 Paras. 49 and 84; following, inter alia, Theratechnologies Inc. v. 121851 Canada inc., [2015] 2 SCR 106, 2015 SCC 18 or Canadian Imperial Bank of Commerce v. Green, [2015] 3 SCR 801, 2015 SCC 60 Para. 50 Para. 46. Paras. 20, 46 and 54 Para. 45 Paras. 42, 45 and 55 Para. 55 Derome v. Amaya inc., 2017 QCCS 44, paras. 79 et seq. Para. 36; compare: Mask v. Silvercorp Metals Inc., 2016 ONCA 641 and Mask v. Silvercorp Metals Inc., 2014 ONSC 4161 – leave to appeal ref’d: Mask v. Silvercorp Metals, Inc., 2014 ONSC 464 (Ont. Div. Ct); Bayens v. Kinross Gold Corp., 2013 ONSC 6864; Silver v. Imax, (2009) 66 B.L.R. (4th) 222, leave to appeal ref'd, Silver v. Imax,2011 ONSC 1035 (Ont. Div. Ct) Paras. 73 to 79 Paras. 66 et seq.; leave to appeal had been referred to a panel of the Court: Amaya inc. v. Derome, 2017 QCCA 335. Paras. 49 and 84 Paras. 9 and 97 Paras. 9 and 93 Paras. 106 and 107 Collège d'enseignement général et professionnel de Jonquière (CÉGEP) v. Champagne, 1996 CanLII 4413 (CA) Benizri v. Canada Post Corporation, 2016 QCCS 454, para. 6

Year in and year out, the Superior Court of Quebec releases around 175 judgments in class actions matters, and 2017 was no exception. With two years having passed since the reform of civil procedure, the courts have had an opportunity to clarify the effect of a number of new provisions: the low threshold for authorization,1 the limited nature of a defendant's right of appeal a decision authorizing a class action,2 confirmation that certain interlocutory judgments at the authorization stage can only be appealed with leave,3 and the obligation of diligence of the first-to-file applicant4–to name just a few. Decisions on the merits have also raised questions as to the application of the absolute presumption of prejudice in consumer protection law.5 We have also seen developments in decisions relating to the enforcement of transactions, particularly in relation to the rights of the Class Action Assistance Fund to the remaining balance.6 What, then, will 2018 hold? The following is an overview of decisions to watch for this year. 1. Securities: Class Actions and Prior Disclosure On January 10, 2017, in an application under section 225.4 of the Securities Act, CQLR c. V-1.1, the Superior Court ordered defendant Amaya to disclose certain information to petitioner Derome further to an application under article 574 CCP. While the third paragraph of that article provides that the judge may allow “relevant evidence to be presented”, its first paragraph states that the application for authorization must be contested orally; accordingly, it was generally believed that a request to present relevant evidence could be made only by the defence; this was buttressed by the fact that the truth of the allegations in the application for authorization are to be assumed at that stage.7 These  arguments failed to persuade the Superior Court, which gave preference to considerations relating to the general exploratory purpose of pre-trial examinations and the obligation of cooperation that is one of the guiding principles of the new Code of Civil Procedure.8 The motion for leave to appeal was referred to the panel of the Court.9 The hearing was held on August 29, 2017, a decision can be expected in the near future. 2. Bank Fees: Class Actions and Legal Fees When may a judge deny an application to approve a transaction that has been negotiated between counsel for the class members and the defendants in a class action? In the opinion of Justice Claudine Roy, then of the Superior Court, a judge must do so when [TRANSLATION] “the result of the transactions is of very little value for the members, [even if] the defendants have succeeded in causing the plaintiff to lose interest.”10 On January 23, 2017, she refused to homologate three transactions,11 on the basis that they offered no real advantage to the members, and rather benefited class counsel, certain defendants, and certain not-for-profit organizations. She called on the courts to be vigilant in ensuring that class actions did not become [TRANSLATION] “a source of enrichment for class member counsel and a source of funding for not-for-profit organizations” and suggested that in that case, a discontinuance was more in keeping with the rules of fairness and the objective of class actions.12 A few days later, her then colleague, Justice Denis Jacques, adopted her comments and also refused to homologate a transaction in a related case.13 On March 31, 2017, Justice Marie Saint-Pierre of the Court of Appeal confirmed that the refusal by a judge of the Superior Court to authorize a transaction could be appealed, but only with leave: unlike a judgment homologating a transaction, a judgment refusing to do so does not terminate the proceedings, and, accordingly, following the ordinary rule pertaining to interlocutory judgements, it may be appealed only with leave.14 Leave was however granted in both cases. The appeal was heard on September 1, 2017, and decision was taken under advisement. A decision should be released in early 2018 that will provide guidelines for a judge exercising the power to review transactions. 3. Motor Vehicles: Class Actions and Interpretation of a Settlement The automotive world was astounded on September 18, 2015, when it was revealed that Volkswagen had installed surreptitious software in some of its diesel-powered vehicles to falsify the results of environmental compliance tests done by government agencies. Numerous class actions were instituted, including, in Canada, one in Quebec and another in Ontario. After lengthy talks, the parties reached a comprehensive agreement regarding certain categories of vehicle, which agreement was endorsed by the Superior Courts of Quebec15 and Ontario.16 The agreement included a provision that some owners would be eligible for a refund in the event that certain “fixes” were not available by June 15, 2017. On June 15, 2017, the fixes had received all of the necessary regulatory approvals, but had not yet been put on the market, and a dispute ensued as to whether the refund was available. Motions for interpretation of the settlement were filed in both jurisdictions. In Quebec, the Court concluded that the “availability” contemplated in the settlement agreement had to be understood to mean availability of the fix itself and that approval by the authorities before the deadline was not sufficient to defeat the obligation to refund. The Court noted that a transaction of this scope is necessarily a delicate compromise, the terms and deadlines for which were deliberately chosen over the course of numerous talks,17 and also pointed out that the opposite interpretation assumed that the agreement did not contain an implementation date and would leave performance to the whim of the defendants,18 which seemed hardly compatible with the spirit of a settlement. However, its Ontario counterpart came to precisely the reverse conclusion: the refund is dependent on the availability of the fixes, so that without them, the refund clause cannot apply. This said even if the agreement does not mention a specific deadline for performance, defendants are required to implement it diligently, having regard to the good faith performance obligation clause.19 The Quebec Court of Appeal is to hear the appeal on February 2, 2018,20 and the Ontario Court of Appeal will do so shortly thereafter. 4. Investments: Class Actions and Plans of Arrangement On November 30, 2015, the Superior Court authorized a class action instituted against certain entities in the Desjardins Group relating to risky investments, including some in connection with asset-based commercial paper21 (“ABCP”). The ABCPs had already been the subject of a plan of arrangement filed with and approved by the Ontario Superior Court of Justice under the Companies’ Creditors Arrangements Act, RSC 1985, c. C-36 and an injunction. The defendants therefore applied to the Superior Court to strike out the conclusions in the class action proceedings relating to the ABCPs. The Court ruled that the motion was premature and that further evidence would be required before it could conclude the allegations were aimed at matters fully covered by the plan of arrangement..22 Since the matter involved a question of jurisdiction – what is more, a novel one –, the Court of Appeal agreed to consider the matter,23 and it is to be heard on February 9, 2018. 5. Noise Pollution: Class Actions and Constitutional Law Factory discharges, highway dust, and noise pollution: the number of class actions based on neighbourhood disturbances continues to rise in the wake of the decision in St. Lawrence Ciment.24 Two such cases should be watched this year, since they involve not only the principle of the free enjoyment of a person’s property, guaranteed by the Civil Code and the Quebec Charter, but also the broad rules governing the division of constitutional powers between the federal and provincial governments. Because aviation falls within the exclusive jurisdiction of Parliament, companies operating in that field are considered to be more or less immune to provincial legislation interfering with the conduct of their business. It remains to be determined whether interjurisdictional immunity, as the doctrine is known, is sufficient to defeat a class action alleging excessive noise pollution. Interjurisdictional immunities were argued at the November 20-21, 2017 authorization hearing in the action instituted by Les Pollués de Montréal-Trudeau against the operator of the Trudeau airport. Justice Chantal Tremblay may acceded to the submission –and deny the authorization– or refer the issue for determination on the merit, if she is of the view, for instance, that the evidence is currently insufficient for a decision. However, the argument should find a definitive answer by the end of the year, since a five-week trial is to begin in February in the action instituted by the Coalition contre le bruit against the operators of the airfield at Lac-à-la-Tortue in Mauricie. Lavery was retained in this matter after  the judgment granting authorization.25 6. Retail Commerce: Class Actions and Consumer Law Between 2007 and 2011, Leon’s Furniture advertised to customers that they could [TRANSLATION] “pay nothing for 15 months”. Some of the purchase financing programs, however, involved paying annual administrative fees. On July 31, 2017, the Superior Court found Leon’s liable and ordered the company to pay almost two million dollars to consumers,26 stating in passing that assessing the quantum of compensatory damages a discretionary exercise. While the decision relies on the Supreme Court's decision in Time, specificallythe passages dealing with the irrebuttable presumption of prejudice resulting from a violation of the Consumer Protection Act, CQLR, c. P-40.1 [CPA]27, it seems to run counter to a decision of the Court of Appeal rendered barely two months earlier,28 which many took to hold that, even in the class action context, it is up to a consumer who wishes to obtain compensatory damages to prove the alleged prejudice and that it was caused by the merchant’s violation of the CPA. Although the Superior Court’s decision squarely serves the remedial and protective objectives of the CPA, it raises a number of questions regarding the applicability of the general rules of civil law to consumer protection cases, especially  as they relate to awards of compensatory damages. We commented on those decisions earlier here. The appeal is expected to be heard at the end of 2018.   Asselin v. Desjardins Cabinet de services financiers inc., 2017 QCCA 1673; Ameublements Tanguay inc. v. Cantin, 2017 QCCA 1330 (leave to appeal requested); Pfizer inc. v. Sifneos, 2017 QCCA 1050. Groupe Jean Coutu (PJC) inc. v. Sopropharm, 2017 QCCA 1883; Trottier v. Canadian Malartic Mine, 2017 QCCA 119. Groupe Jean Coutu (PJC) inc. v. Sopropharm, 2017 QCCA 1883. Cohen v. Option Consommateurs, 2017 QCCA 94 and Badamshin v. Option Consommateurs, 2017 QCCA 95 (leave to appeal to the Supreme Court denied: SCC No. 37521 (July 16, 2017). Vidéotron v. Union des consommateurs, 2017 QCCA 738; Option Consommateurs v. Meubles Léon ltée, 2017 QCCS 3526. Handicap-Vie-Dignité v. Résidence St-Charles-Borromée, CHSLD Centre-ville de Montréal, 2017 QCCS 935 (costs of publication and remaining balance); Halfon v. Moose International Inc., 2017 QCCS 4300 (right to remaining balance where payment is in nature). Derome v. Amaya inc., 2017 QCCS 44. Derome v. Amaya inc., 2017 QCCS 44, paras. 41-53. Amaya inc. v. Derome, 2017 QCCA 335. Option Consommateurs v. Banque Amex du Canada, 2017 QCCS 200, para. 65. Option Consommateurs v. Banque Amex du Canada, 2017 QCCS 200. Option Consommateurs v. Banque Amex du Canada, 2017 QCCS 200, para. 110. Option Consommateurs v. Banque Canadienne Impériale de Commerce, 2017 QCCS 275. Option Consommateurs v. Banque Amex du Canada, 2017 QCCA 502. Option Consommateurs v. Volkswagen Group Canada Inc., 2017 QCCS 1411. Quenneville v. Volkswagen, 2017 ONSC 2448. Option Consommateurs v. Volkswagen Group Canada Inc., 2017 QCCS 2870, par. 22. Option Consommateurs v. Volkswagen Group Canada Inc., 2017 QCCS 2870, par. 39. Quenneville v. Volkswagen, 2017 ONSC 4583. Authorization granted: Volkswagen Group Canada Inc. v. Option Consommateurs, 2017 QCCA 1361. Dupuis v. Desjardins Sécurité financière, compagnie d'assurance-vie, 2015 QCCS 5828. Dupuis v. Desjardins Sécurité financière, compagnie d’assurance-vie, 2016 QCCS 6348. Desjardins Sécurité financière, compagnie d'assurance-vie v. Dupuis, 2017 QCCA 802. St. Lawrence Cement Inc. v. Barrette, [2008] 3 SCR 392, 2008 SCC 64. Authorization granted: Coalition contre le bruit v. Shawinigan (Ville de), 2012 QCCS 4142. Option Consommateurs v. Meubles Léon ltée, 2017 QCCS 3526. Richard v. Time Inc., [2012] 1 RCS 265, 2012 CSC 8, par. 123. Vidéotron v. Union des consommateurs, 2017 QCCA 738.

Lavery recently attended the Strictly Automotive Seminar organised by the Defence Research Institute in Detroit, Michigan. The seminar addressed legal issues which the automotive industry is currently facing worldwide. This newsletter provides an overview of the legal principles vehicle manufacturers and dealers should consider when carrying on business in Québec. All transactions involving consumers in Québec are governed by the Consumer Protection Act  (“CPA”)1. The CPA covers several aspects of the activities of automotive manufacturers and dealers, including but not limited to warranties, credit contracts, advertising and price posting. Warranties The CPA sets out several legal warranties in favour of consumers which dealers, manufacturers and intermediaries are required to provide.2 The two main legal warranties are: (1) the warranty of fitness for purpose3 (goods must be fit for the purpose for which goods of that kind are ordinarily used) and (2) the warranty of durability4 (goods must be durable in normal use for a reasonable length of time, having regard to their price, the terms of the contract and the conditions of their use).5 These warranties result in a lower burden of proof being imposed on consumers. Once a consumer has shown a deficit of use or lack of durability, the dealer or manufacturer has the burden of proving that there is no latent defect, that the defect results from improper use by the consumer, that the defect was known by the consumer at the time of purchase or that the lack of durability is the result of normal wear and tear. Contracts of credit The form and content of contracts of credit (as well as statements of account) are strictly regulated by the CPA.6 The main obligations of merchants who enter into credit contracts are: (1) the obligation to fully disclose credit charges and the credit rate; (2) the prohibition against charging fees not disclosed in the contract; and (3) the proper computation of the credit rate. The CPA also governs advertising about credit, imposing strict disclosure obligations.7 To ensure compliance with the duties prescribed by the CPA, dealers and manufacturers must carefully follow these requirements. Over the years, the credit industry has had to defend several class actions, many of them involving the disclosure requirements for credit contracts.8 The Québec Legislature has been planning to modernize the CPA provisions about credit contracts for many years. The Québec National Assembly is currently working on Bill 134, An Act mainly to modernize rules relating to consumer credit and to regulate debt settlement service contracts, high-cost credit contracts and loyalty programs9. Bill 134 contains measures which, if adopted, will allow consumers to take action against credit providers and rely on legal and conventional warranties against them.10 At the time of writing, Bill 134 is undergoing final “section by section” reading and therefore, should be passed shortly. We will discuss these new measures in an upcoming bulletin. Advertising A complete chapter of the CPA covers business practices, including advertising.11 These practices include: the prohibition against making false or misleading representations to consumers generally12 or regarding the benefits or other attributes ascribed to goods or services,13 the merchant’s identity,14 the rebates or premiums offered,15 the nature of the transaction16 and the price of the goods or services.17 Failing to mention an important fact in commercial advertising or a representation is also prohibited.18 These prohibited business practices are similar to what constitutes deceptive advertising practices in common law jurisdictions. The standard of analysis for the determination of deceptive practices is applied from the perspective of the average, inexperienced and credulous consumer.19 The CPA provides that such use of a prohibited practice creates a presumption that, had the consumer been aware of such practice, he would not have agreed to the contract or would not have paid such a high price.20 In the landmark decision Richard v. Time, the Supreme Court of Canada held that the use of a prohibited practice such as false or misleading advertising creates an absolute presumption of prejudice in favour of the consumer if (1) the merchant or manufacturer failed to fulfil an obligation imposed by the CPA; (2) the consumer saw the representation that constituted a prohibited practice; (3) this resulted in the formation, amendment or performance of a consumer contract; and (4) a sufficient nexus exists between the content of the representation and the goods or services covered by the contract. Where these four requirements are met, the court can conclude that “the prohibited practice is deemed to have had a fraudulent effect on the consumer”. In such a case, the contract so formed, amended or performed constitutes, in itself, a prejudice suffered by the consumer”.21 There is a strong relationship between the CPA provisions governing warranties and those governing prohibited business practices. Although both address commercial representations, they provide for different remedies. For example, failing to disclose a latent defect known to a manufacturer can trigger liability based on not only legal warranty but also the failure to mention an important fact in a representation made to a consumer. Advertising regarding autonomous vehicles will be an interesting issue within the next few years. Before launching an advertising campaign for this type of vehicle, section 220 a) of the CPA will have to be considered. This provision prohibits a manufacturer from falsely, by any means whatsoever, ascribing certain special advantages to goods or services in advertising. Additionally, because of the novelty effect of these vehicles, merchants will have to be very careful not to fail to mention an important fact regarding their use.22 Prices The CPA contains strict rules regarding price posting and labelling. It provides that no merchant may claim fees from a consumer unless the amount thereof is clearly indicated in the contract.23 This includes credit contracts and leasing contracts. As a corollary to the provisions regarding the display of price, the CPA states that merchants may not charge a higher price for goods or services than advertised.24 The courts have been relatively strict in applying these provisions, leaving little room for error in prices and ruling that an error in price is not an excuse.25 Merchants must be very diligent in advertising or disclosing prices and fees, as several class action proceedings in Québec have been based on the failure to disclose fees or other charges in contracts.26 Conclusion Manufacturers and dealers in the automotive industry must pay particular attention to the provisions of the CPA. If the manufacturer or dealer fails to fulfil an obligation imposed on him by the CPA, the consumer may demand, without prejudice to other remedies, the specific performance of the obligation (for instance, the repair of the product, the replacement of defective parts or to carry out maintenance work), that his obligations be reduced or that the contract be rescinded, set aside or annulled. The consumer may also claim punitive damages.27 Furthermore, the CPA contains penal provisions which could vary to a fine of $2,000 to $100,000.28 The range of legal issues facing players in the automotive industry is growing exponentially and showing no sign of slowing down. Indeed, a substantial number of cases and class actions have been instituted against businesses involved in this sector notably for product liability and prohibited business practices. The best way to prevent such claims is to take preventive action to avoid non–compliance with the CPA.   Consumer Protection Act, P-40.1. Sections 53 & 54 CPA. Section 37 CPA. Section 38 CPA. The CPA also provides a warranty for the availability of parts and repair services: Section 39 CPA. Division III, Sections 66-150 CPA. Sections 243, 244 & 247 CPA. For example: Dion v. Compagnie de services de financement automobile Primus Canada, 2015 QCCA 333; Pilon v. Mazda Canada inc., 2013 QCCS 748; Thibert v. Hyundai Motor America, 2013 QCCS 744, Bourgeois v. Ford du Canada ltée, 2013 QCCS 745; Contat v. General Motors du Canada ltée, 2009 QCCA 1699. National Assembly, Bill 134. Section 103.1 suggested by Section 19 of Bill 134. Title II, Sections 215-253 CPA. Section 219 CPA Sections 220 & 221 CPA. Section 242 CPA Sections 231 & 232 CPA. Section 229 CPA. Section 224 c) CPA. Section 228 CPA. Section 218-219 CPA; See also Richard c. Time Inc. 2012 CSC 8. Section 253 CPA Richard c. Time Inc. et at 2012 CSC 8, par. 124. Section 228 CPA Section 12 CPA. Section 224 c) CPA See Boutin v. 9151-8100 Québec inc. (St-Basile Toyota), 2016 QCCQ 5282; Ouellet v. Charest Expert inc., 2010 QCCQ 11313; Vermeulen v. Marine Nor Sport inc., 2015 QCCQ 926; Comtois v. Vacances Sunwing inc., 2015 QCCQ 2684. Bank of Montreal v. Marcotte, [2014] 2 SCR 725, 2014 SCC 55 (CanLII); Dion v. Compagnie de services de financement automobile Primus Canada, 2015 QCCA 333; Pilon v. Mazda Canada inc., 2013 QCCS 748; Thibert v. Hyundai Motor America, 2013 QCCS 744; Bourgeois V. Ford du Canada ltée, 2013 QCCS 745; Contat v. General Motors du Canada ltée, 2009 QCCA 1699. Section 272 CPA. Articles 277, 278 CPA.

Over half of the applications for authorization to institute class actions filed in Québec since the beginning of 2017 are based on consumer law. There is no doubt that consumer class actions will continue to fuel discussions within the business and legal communities. We will continue to monitor the situation closely. Two current issues have been identified: Does a consumer claiming moral damages in a class action have to prove injury and a causal connection between such injury and the merchant’s alleged breach? At present, two trends appear to be developing. Vidéotron c. Union des consommateurs1 appeared to have provided the answer. In that class action, the Court of Appeal of Québec affirmed that in order to be entitled to damages under general law, a consumer must establish injury and the causal connection between that prejudice and the merchant’s contravention of the Consumer Protection Act. Recently, however, the Superior Court of Québec in Option consommateurs c. Meubles Léon2 held that the quantum of damages could be left to the court’s discretion. The Superior Court thereby departed from the Court of Appeal’s decision in Vidéotron , believing that it was instead bound by the teachings of the Supreme Court of Canada in Richard v. Time,3 a decision that was not rendered during a class action. Relying on the Supreme Court’s ruling in Time, the Superior Court reiterated that the consumer benefits from an absolute presumption of prejudice once it is established that a prohibited practice occurred. Adopting a pragmatic approach, the Superior Court inferred that where there was a prejudice to some group members, that same prejudice was suffered by the group as a whole. The Court, therefore, awarded each group member $100 for moral damages after hearing certain group members testify that they were angry and frustrated about the false or misleading advertising by Leon’s Furniture. In light of this decision, the courts could systematically award moral damages to every member where some consumers testify that they were frustrated by a merchant’s prohibited practice. Such an approach would certainly simplify the requirements on the burden of presenting evidence to establish such an injury. Note, however, that Leon’s Furniture is appealing the Superior Court decision notably on the ground that the Court erred in awarding $100 for moral damages to the group members. The Court of Appeal will therefore have the opportunity to clarify its rulings. Should the group representative be examined under article 574 C.C.P. in order to determine the representative’s capacity to properly represent the group? Since the Court of Appeal of Québec decisions in Sibiga4 and Boiron,5 it seems clear that at the authorization stage, the courts will take a flexible, broad approach to the criteria in article 575 C.C.P. with respect to the representative’s ability to properly represent the group members. Indeed, the court should find that the minimum requirements have been satisfied where the representative understands i) the allegations in the application for authorization and ii) that other consumers may also have suffered similar prejudice. However, while the facts alleged by the plaintiff must be assumed to be true at the authorization stage, the Superior Court recently provided some guidance as to the circumstances that would justify introducing evidence and examining the proposed representative in order to determine his ability to properly represent the group members6. In Mahmoud, the Superior Court allowed the defendant to examine the plaintiff on the steps undertaken to ascertain the composition of the group members aside from consulting his lawyers and what he had done to verify the extent and size of the proposed group. The Court noted the absence of any allegations on these subjects and held that the questions were relevant to determining whether to apply the rules for mandates to take part in judicial proceedings on behalf of others or for consolidation of proceedings under article 575(3) C.C.P. The Court added that these questions were also relevant to determining whether the plaintiff was in a position to properly represent the interests of group members. Several months earlier, the Superior Court arrived at the same conclusion on examining the representative under article 574 C.C.P.7. The Court held that allegations akin to legal conclusions concerning the representative’s ability cannot satisfy the requirements of article 575(4) C.C.P. As a result, the Court found that the examination of the representative would be an efficient means of verifying the criteria of article 575 C.C.P. in a useful and judicious manner to shed light on some of the allegations of the motion for authorization that may be incorrect or incomplete. Consumer law and class actions are two areas of law that have been rapidly developing in recent years, which is why the courts are faced with issues which cannot be definitively answered by the Superior Courts. During the coming months, it will be interesting to see which approach the courts adopt on awarding damages and where applicable, moral damages. It will also be necessary to see whether the Superior Court will re-examine the criterion on adequate representation by allowing defendants to examine and verify the suitability of representatives.   2017 QCCA 738. 2017 QCCS 3526. 2012 CSC 8. Sibiga c. Fido Solutions, 2016 QCCA 1299. Charles c. Boiron, 2016 QCCA 1716. Mahmoud c. Société des casinos du Québec inc., 2017 QCCS 1691. Michaud c. Sanofi-Aventis Canada inc., 2016 QCCS 3977.

On November 22, 2016, the Québec Court of Appeal issued an unprecedented judgment on the application of article 578 of the New Code of Civil Procedure (“NCCP”) in the following cases: DuProprio inc. v. La Fédération des chambres immobilières du Québec, Énergie éolienne Des Moulins S.E.C. v. Labranche and La Centrale des syndicats du Québec c. Allen.1 In a judgment, written by Justice Jacques Chamberland, the Court of Appeal unanimously dismissed the defendants’ applications for leave to appeal the judgments rendered in first instance authorizing the institution of the class actions. Given that article 578 is a new provision, the Court of Appeal joined these three cases for the purposes of the hearing and referred the issue to a panel of three judges. History of the right to appeal Firstly, Justice Chamberland provided an outline of the legislative history of the right to appeal a judgment authorizing the institution of a class action. Introduced in 1978, the class action provisions at the time permitted both the plaintiff and the defendant to appeal the judgment authorizing the institution of the class action. In 1982, the legislator instituted an asymmetric right to appeal, doing away with the defendant’s right to appeal at the authorization stage while retaining the plaintiff’s right to appeal a judgment denying authorization. During the recent reform that resulted in the NCCP, which came into effect on January 1, 2016, the legislator enacted section 578 NCCP, which henceforth permits the appeal, by leave, of judgments granting an application for authorization to institute a class action. However, the legislator did not specify the criteria required to grant such leave. The standard for intervention The Court states that the standard for intervening on the appeal of a decision granting or dismissing an application to institute a class action is [translation] “stringent”. The Court of Appeal will intervene only if the first instance judge committed an error in law or manifestly erred in his or her assessment of the four criteria governing the authorization of the action.2 The applicable test Relying on the Minister of Justice’s commentary which states that [translation] “the appeal of the authorization should only deal with the conditions for granting it”, Justice Chamberland explained that [translation] “the test should not be so severe that it sterilizes the right to appeal on leave, nor so supple that it places both parties on the same footing with respect to the right to appeal”. In defining the applicable test, the Court considered the fact that the threshold required to obtain authorization to institute a class action is low and that the judge has [translation] “broad discretion” to grant such a motion. Thus, the Court stated that the test must be “stringent” and appeals must be reserved for [translation] “exceptional cases”: The judge will grant leave to appeal where the judgment appears to have an overriding error on its very face concerning the interpretation of the conditions for instituting the class action or the assessment of the facts relating to those conditions, or, further, where it is a flagrant case of incompetence of the Superior Court.3 According to the Court, this test respects the intention of the legislator particularly as it: i) deals only with the conditions for exercising the class action, ii) excludes appeals that are unnecessary or that only address incidental matters, iii) respects the discretion of the first instance judge, iv) does not increase the burden to be met by the plaintiff for instituting a class action, and v) avoids a long and costly debate on the merits where the class action is ill-founded. Conclusion Applying the aforementioned test to the specific facts of each of the cases, the Court of Appeal dismissed all the applications for leave to appeal the judgments authorizing the institution of the class actions, with costs against the appellants. Comments This decision once again demonstrates the liberal approach adopted by the courts, which imposes a low threshold for obtaining authorization to institute a class action. The recent obiter of Justice Bich4 in which she invites the legislator to reconsider the usefulness of the authorization stage in its current form is just a further reflection of this more liberal approach. There is reason to question the real benefits of limiting the right to appeal the judgment authorizing the institution of a class action in such a manner. Indeed, a true filtering mechanism with a right to appeal at the authorization stage would allow the plaintiff to get a good feel, at a preliminary stage, of the viability of his claim before devoting time and money to same. He therefore risks being deprived of the Court of Appeal’s insights on the pitfalls and obstacles that could compromise the success of the action later on. Furthermore, a judgment of the Court of Appeal confirming the authorization of the class action can serve as a strong argument in favour of negotiating a settlement, thereby avoiding the expenses and waste of judicial resources resulting from a trial on the merits. The Court file numbers are: DuProprio: (500-09-026070-169); Énergie éolienne Des Moulins: (200-09-009270-163 and 200-09-009273-167); and CSQ: (200-09-009238-160), (200-09-009241-164) and (200-09-009247-161). Art. 575 C.C.P. At para. 59 of the decision. Charles v. Boiron Canada inc., 2016 QCCA 1716 (CanLII).

On August 10, 2016, the Québec Court of Appeal authorized a class action pertaining to international roaming fees, thus reiterating, with renewed respect for the opposing view, that meeting the authorization threshold and the criteria respecting the representative’s interest is fairly easy under Quebec law.1 The proposed class action After having incurred “disagreeably surprising”2 roaming fees during a trip to the US, Inga Sibiga, a Quebec consumer who has a wireless telephone contract with Fido (a subsidiary of Rogers), seeks the authorization to institute a class action against Bell, Fido, Rogers and Telus, the four major wireless service providers in Canada. In essence, she claims that the international roaming fees charged by those companies to Quebec consumers are abusive, lesionary and so disproportionately high as to amount to exploitation, contrary to section 8 of the Consumer Protection Act3 and article 1437 of the Civil Code of Québec. Ms Sibiga asks for the reduction of the obligation of subscribers and punitive damages. International data roaming allows a consumer to use a mobile phone out of the area served by his or her provider, the latter resorting to another provider’s network, at a set tariff. Since all defendants offer national coverage, roaming charges only become an issue in respect of data transmission abroad. The decision under appeal On July 2, 2014, the honourable Michel Yergeau of the Superior Court of Québec dismisses the motion for authorization with costs. The Superior Court essentially finds that Ms Sibiga does not appear to have satisfied the requirement of the then-applicable article 1003(b) CCP as the facts alleged in her motion are not sufficient to justify the conclusions sought. Justice Yergeau notes that the motion contains no allegation or document establishing the framework of the contractual obligations assumed by the petitioner and by her service provider.4 Specifically, he scolds the petitioner for having failed to produce a copy of her contract with Fido, a contract which he characterizes as an “essential tangible fact”.5In view of this rather poor evidence, it appears to the Court that the allegations as to the exploitative nature of the roaming fees are mere speculations and not facts sufficient to justify authorizing a class action. Expressing an oft-heard concern, the Superior Court insists that it is not its role “to embark on the equivalent of a public inquiry” as called for by the motion.6As liberal as Infineon suggests the screening mechanism at the authorization stage should be,7“[o]ne does not launch court proceedings as expensive for the judicial system as a class action on such a tenuous base.”8 Adding to this decided conclusion, the Superior Court further expresses the view that Ms Sibiga is not in a position to adequately represent the members of the class, as required by article 1003(d) CCP. This is in part because she does not have the required standing within the meaning of article 55 CCP, at least against Telus and Bell since she is bound by contract only with Fido (and thus Rogers). This is also because, having only a minimal understanding of the class action process and no control whatsoever over the proceedings, she appears to be no more than a pawn of her attorneys.9 Without blaming Ms Sibiga or her lawyers, the Superior Court insists on the independence of the “representative” in a class action. Ms Sibiga’s appeal would be allowed, the honourable Nicholas Kasirer writing for the Court of Appeal. The “social dimension” of class actions, emphasized by the most recent Supreme Court decisions, is the rock against which the Superior Court’s decision is quashed.10 Appeal Although concurring with the concerns expressed by the Superior Court that “a lax approach to the standard can result in authorization of class actions that do not deserve to go to trial”,11the Court of Appeal is of the view that it erred: “while a judge can refuse a motion for authorization that relies on an overly liberal interpretation of the Infineon standard, it is a mistake in law to refuse authorization by treating that standard as overly liberal in itself.”12 In the Court of Appeal’s opinion, “by denying authorization […] based on what he described as an imprecise and speculative claim, the motion judge neglected to apply the prima facie case standard relevant to this consumer class action”13 and thus failed to see the threshold for authorization was met. The unbearable lightness of the authorization filter “The action should be allowed to proceed if the applicant has an arguable case,”14 “the court’s role is merely to filter out frivolous motions”15: article 1003 CCP sets a low threshold, despite proposals for a more interrogative approach. Indeed, a scintilla of credibility suffices at this stage: it is at the trial on the merits that allegations should be substantiated, supported by the evidence. The motion judge, says the Court of Appeal, should not have asked for more. In other respects, perhaps paradoxically, the Court of Appeal finds that it was “imprudent and indeed mistaken”16 for the Superior Court to engage with the motion and its supporting evidence on the merits, as the authorization calls for a consideration of the surface of the evidence.17 What is more, the Court of Appeal is less convinced than the Superior Court that it is necessary that Ms Sibiga’s contract be filed in the court record. Since the existence of a contractual relation is not disputed, the Court of Appeal considers that, at the authorization stage, the filing of the monthly statements from the service provider and some publicly available information documents should be considered sufficient.18 The representative is neither a puppet nor a spearhead As to the petitioner’s representative capacity, in line with the Marcotte19 decision of the Supreme Court (which was unavailable to the Superior Court for it was under advisement the time), the Court of Appeal concludes that the absence of a direct cause of action (here, in contract) with two of the proposed defendants should not constitute an insurmountable obstacle to a class action.20 The issue of the role and capacity of the petitioner to work with –rather than for– her attorneys proves a more delicate one: although excesses have been known to occur, entrepreneurial lawyering is not itself a bar to finding that the designated representative has the requisite interest in the suit.21 The genuineness of a motion is not wholly discredited merely because the proceedings bear the lawyer’s scent.22 Here too, the Court of Appeal finds that the Superior Court failed to apply the liberal standard warranted by the Supreme Court. The class description: the burden of proof belongs to the brave Building on a comment of the Superior Court to the effect that, absent any detail concerning many of the countries where roaming costs could allegedly have been incurred or the variety of the mobile plans involved, the proposed class was unduly inclusive, defendants Bell and Telus had asked that, should the appeal be allowed, the class be restricted.23 The Court of Appeal declines to make such a ruling. As tempting as it might be to bring the proposed class to more common proportions, doing so would amount to prejudging the ability of the applicant to conduct her case.24 Again, at the authorization stage, it suffices to establish an arguable case, and this burden was met by petitioner.25 In any event, class definition can be reviewed by the court at the trial on common issues.26 Conclusion The decision of the Québec Court of Appeal falls in line with the most recent decisions of the Supreme Court of Canada relating to class actions. The decision is not one for jurisprudential controversy; it rather serves to show how emphatically the highest court in the land has diluted the threshold for authorization in Quebec.27 Authorization is, of course, not a mere formality, a call for rubber-stamping, but it is not fatal for the evidence presented at this preliminary stage to be incomplete or imprecise. The criteria for authorization have been substantively untouched by Québec’s civil procedure reform, there is every reason to believe that there is a bright future for this liberal approach. Sibiga c. Fido Solutions inc., 2016 QCCA 1299 [CA], inf. Sibiga c. Fido Solutions inc., 2014 QCCS 3235 [SC]. CA, at para. 18. Consumer Protection Act, CQLR c P-40.1. SC, at para. 113. SC, at para. 109 [our translation]. CA, at para. 131; SC, at para. 121. SC, at para. 147, reference made to Infineon Technologies AG v. Option consommateurs, [2013] 3 SCR 600, 2013 SCC 59. SC, 98 [our translation]. SC, at paras. 148-155. CA, at para. 51, reference made to Bisaillon v. Concordia University, [2006] 1 SCR 666, 2006 SCC 19, at para. 19. CA, at para. 14. CA, at para. 15. CA, at para. 15. Infineon Technologies AG v. Option consommateurs, [2013] 3 SCR 600, 2013 SCC 59, at para. 65. Ibid., at para. 61. CA, at para. 96. CA, at paras. 69-96. CA, at paras. 56-68. Bank of Montreal v. Marcotte, [2014] 2 SCR 725, 2014 SCC 55. CA, at paras. 39, 98, 115. CA, at paras. 102-103. CA, at para. 104. CS, at para. 122. CA, at paras. 140-141. CA, at paras. 137-138. CA, at para. 150. See e.g., Infineon Technologies AG v. Option consommateurs, [2013] 3 SCR 600, 2013 SCC 59; Vivendi Canada Inc. v. Dell’Aniello, [2014] 1 SCR 3, 2014 SCC 1; Bank of Montreal v. Marcotte, [2014] 2 SCR 725, 2014 SCC 55; Theratechnologies Inc. v. 121851 Canada Inc., [2015] 2 SCR 106, 2015 SCC 18.

On February 1, 2016, the Superior Court of Québec rendered a significant decision in the area of civil liability in the context of the practice of a sport1. The judgment was widely reported in the media due, on the one hand, to the importance of the amount granted by the judge (8 million dollars) and, on the other hand, because it is closely related to the practice of the national sport of Canadians. Will this judgment, through which a junior hockey player who became quadriplegic after receiving a check from behind has been allowed such an important amount as compensation, change the rules of the game? The facts The plaintiff, Andrew Zaccardo (hereinafter, “Zaccardo”), who was 16 years old at the time of the events, was a junior amateur hockey player. On October 3, 2010, his life took a turn for the worse when he received a check from behind from another player, defendant Ludovic Gauvreau-Beaupré (hereinafter, “Gauvreau-Beaupré”), who violently hit him from behind. Zaccardo became quadriplegic. The video clip, filed as evidence at the trial, shows a sequence resembling those routinely seen by hockey fans in sports information bulletins (at 0:15 to 0:30 more specifically). Zaccardo instituted civil proceedings against Gauvreau-Beaupré, his insurer, as well as Hockey Québec and Hockey Canada, claiming damages, particularly for the costs and expenses related to the care required by his physical condition for the remainder of his life. Prior to the hearing, Zaccardo discontinued his action against Hockey Québec and Hockey Canada. The hearing showed that for many years both entities had systematically discouraged and condemned checking from behind. At the time of the hearing, the parties agreed to an admission as to the quantum of damages for an amount of 8 million dollars. Mr. Justice Daniel W. Payette came to the conclusion that Gauvreau-Beaupré had committed a fault and found him liable for the damages suffered by Zaccardo. The Judgment At the outset, Justice Payette stated that players participating in hockey games are subject to the law as any other citizens: [TRANSLATION] “an ice rink is not a law-free zone”2. Justice Payette reviewed the relevant case law, both from Quebec and the common law provinces and concluded that strictly speaking, “sports liability” does not exist as a separate area of liability: players are subject to the usual rules governing civil liability and are thus required to act like [TRANSLATION] “reasonable players placed in the same circumstances”. The judge also confirmed that the practice of hockey involves inherent risks which a player accepts by participating in a game, but that by doing so, he is not however deemed to accept unreasonable risks which he is not aware of. Accordingly, the violent check suffered by Zaccardo did not constitute a risk which he should have foreseen when participating in the game. Moreover, the judge noted that a breach of the rules of the game, whether sanctioned by a penalty or not during the game, will not always constitute a fault within the meaning of civil law. Therefore, the court ordered Gauvreau-Beaupré and his insurer to pay to Zaccardo the admitted amount of 8 million dollars. It must be noted that at the beginning of the hearing, Gauvreau-Beaupré’s insurer informed the court that it was not alleging the intentional fault of the insured and, accordingly, the judgment does not deal with this issue. In the circumstances, the court also ordered the insurer to indemnify Zaccardo for the damages he suffered. The surgical precision with which the judge dissected the sequence of the check shows that he no doubt has experience of the practice of hockey and leads one to believe that this may have influenced the conclusions of the judgment. In addition, the legal reasoning put forward confirms that the efforts made by Hockey Québec and Hockey Canada to promote the safe practice of hockey are still encouraged. Echoes beyond the legal sphere In addition to being the highest amount ever granted to a victim of an injury in such a context, at least in Canada according to our verifications, this judgment already echoes beyond legal circles. For the time being, it is difficult to determine the scope that this decision will have and whether it will impact sports in general. Indeed, despite the magnitude of the amount granted to Zaccardo which, again, had not been contested, the judge noted that each case is dealt with on its own merits and only involves the application of general civil liability principles. In that sense, each situation is to be considered according to its own set of facts. In an era where class actions are instituted by former professional athletes who suffered concussions3 and following numerous other cases of violent actions with serious consequences4this decision may have an impact on the prevailing culture of hockey, which is more than ever called upon to change. Lastly, it must be noted that on March 2 2016, Gauvreau-Beaupré and his insurer appealed the decision5. The conclusions reached by the judge regarding liability will therefore be reviewed in the following 18 to 24 months. Conclusion The judgment in favour of young Zaccardo and the impressive monetary compensation he was granted attest to the numerous efforts made during the last few years to raise players’ awareness to the risk of serious harm associated to the practice of contact sports. The often critical attitude of Justice Payette toward the aggressor also demonstrates that this awareness had at least already entered the mind of the judge. Despite the fact that all the calls for prudence, by-laws and increased sanctions have not succeeded in actualizing the culture of hockey6, it is to be hoped that the whistle blown by Justice Payette will accelerate the changes. Zaccardo v. Chartis Insurance Company of Canada, 2016 QCCS 398, appeal pending: 500-09-025937-160 and 500-09-025938-168. Paragraph 10 of the judgment. For illustration purposes, a group of over 100 former players of the National Hockey League filed an application to be authorized to institute a class action against the NHL for damages suffered as a result of repeated shocks received to the head while they played as professionals: http://www.cbc.ca/sports/hockey/nhl/grand-ledyard-nhl-lawsuit-1.3432273. Also see: http://www.nhlconcussionlitigation.com For example we may think about the action of Todd Bertuzzi against Steve Moore, following which Moore was unable to continue his professional hockey career: https://www.youtube.com/watch?v=Fz9RE9RGrVY. The hockey stick hit given by Marty McSorely to Donald Brashear constitutes another example: https://www.youtube.com/watch?v=eTOfsoJAij4 500-09-025937-160 and 500-09-025938-168. Only a few days ago, another young hockey player from the Montreal region suffered an injury to the neck following a check from behind by another player. However, the young man has been “luckier” than young Zaccardo since his spinal cord was not damaged: http://montrealgazette.com/news/local-news/local-midget-hockey-player-suffers-broken-neck-after-illegal-hit

 This publication was co-authored by Luc Thibaudeau, former partner of Lavery and now judge in the Civil Division of the Court of Québec, District of Longueuil. Lavery is closely monitoring developments in consumer class actions and, in order to keep the business sector informed on the subject, publishes regular newsletters on recent case law and legislative changes that are likely to affect, if not transform, business practices. INTRODUCTION In Fortin v. Mazda Canada Inc.1, the Québec Court of Appeal reversed the judgment of first instance2 and ordered Mazda to pay damages to the drivers of 2004, 2005, 2006 or 2007 Mazda 3 vehicles affected by a particular design flaw. The locking mechanism on the driver’s side appeared to be defective, such that a strategically delivered impact above the door handle on the driver’s side would be enough to neutralize the car’s locking system. The members in the class action were divided into two sub-classes. The first consisted of the owners of vehicles that had been attacked and who claimed the value of stolen items, the cost of damaged doors and their insurance deductibles, if any (“Group 1”). The second sub-class claimed compensation for the inconvenience of having to bring their cars to their dealerships for the installation at no charge of a reinforcement device for the car’s door locking system (“Group 2”). In addition, both groups claimed a reduction in the sale price on the grounds that Mazda had failed to disclose an important fact, as well as punitive damages. THE JUDGMENT OF FIRST INSTANCE The Superior Court of Québec dismissed the class action on its merits on the ground that the door’s locking mechanism did not have a design flaw because, according to the use for which it was intended, the mechanism created a sufficient obstacle, substantially reducing the possibility of theft. It should be noted that there are no security standards governing the efficacy of car locking systems. Consequently, the ease with which the protection system could be circumvented did not amount to a loss of use. The Court also did not agree that Mazda had engaged in a prohibited business practice in failing to disclose an important fact concerning a security feature. In any event, the criminal intervention of a third party broke the chain of causality between the alleged defect and the damages sustained. As for the claims of the members whose vehicles were not broken into (Group 2), the Court was of the view that they had not suffered any manifestation of the defect. The fact that they had to bring their cars to their dealerships for installation of a reinforcement mechanism in the locking system was one of life’s little annoyances and did not therefore warrant an award of damages. As there was no evidence that Mazda had been reckless regarding its legal obligations, the Court also dismissed the claim for punitive damages. THE COURT OF APPEAL JUDGMENT THE CONSUMER PROTECTION ACT (CPA) AND THE CONCEPT OF LATENT DEFECT The CPA stipulates that goods must be fit for the purpose for which they were normally intended (section 37 CPA) for a reasonable length of time, which will vary according to the price paid, the terms of the contract and the conditions of their use (section 38 CPA). If the goods cannot be used for the consumer’s reasonably expected purpose, there is a presumption that the defect existed prior to the sale. Furthermore, neither the merchant nor the manufacturer can argue that they were unaware of the defect (section 53 CPA). The Court confirmed that the aforementioned warranties are a particular application of the concept of latent defect in Quebec civil law. The Court added an important qualification: by operation of the CPA, a consumer wishing to argue loss of fitness for purpose under section 37 CPA has a less onerous burden of proof than a purchaser invoking the warranty of quality under the Civil Code of Québec (CCQ). Indeed, an action invoking the warranty of quality under the CCQ must satisfy four tests, namely, the defect must: 1) be latent, 2) be sufficiently serious, 3) be unknown to the buyer and 4) have existed at the time of the sale. The Court was of the view that, like the warranty provided in section 38 CPA, the warranty against loss of use under section 37 CPA exempts the consumer from having to prove the existence of a latent defect, provided that the consumer conducts an ordinary examination of the item before purchasing it. The Court stated that the presumption of the existence of a hidden defect broadens the [translation:] “traditional concept” of latent defect in that a consumer could benefit from the fitness for purpose warranty under section 37 CPA without the item being affected by a material defect. The consumer need only show that there is a serious loss of use and that he or she was unaware of its existence at the time of the sale. APPLICABILITY OF THE FITNESS WARRANTY The Court noted that the fitness warranty imposed on merchants and manufacturers creates an obligation of result. That obligation is assessed primarily on the buyer’s reasonable expectations. The courts must apply an objective standard, namely the average consumer’s expectations assessed in light of the nature of the product and of its intended use. The Court noted that although often raised as a defence, the fact that a merchant is in compliance with legal or industry standards does not exonerate it unless there has been a finding of loss of use. Furthermore, it stated that [translation:] “the absence of standards does relieve the manufacturer of its obligation to take into account the needs and reasonable expectations of its customers”. The Superior Court therefore erred in holding that under normal use the locking mechanism worked very well. That analysis does not consider the expectations of the consumer who legitimately believes that his or her vehicle has a locking system capable of creating [translation:] “a reasonable obstacle against malicious intrusions”. Applying the presumptions provided in section 37 CPA regarding the prior existence of the defect and the presence of a latent defect, the consumer need only show that the weakness in the locking system was substantial and that, had the consumer known about it, he or she would not have bought the vehicle. In that respect, the Court accepted the appellant’s arguments and held that any consumer aware of the weakness of the locking system would have refused to purchase that model for the price paid. The Court therefore reversed the judgment of first instance and held that the Mazda vehicles covered by the class action were affected by a significant loss of use giving rise to the compensatory measures provided for in section 272 CPA. THE DUTY TO INFORM Section 228 CPA prohibits the merchant, manufacturer, or advertiser from failing to mention an important fact. Unlike the judge of first instance, the Court of Appeal was of the view that the “important fact” referred to in section 228 CPA is not [translation:] “aimed solely at protecting the physical safety of consumers”, but also targets any key element of a contract. An element will be key if it is likely to interfere with the consumer making an informed decision. Mazda had the obligation to disclose the defect in the protection system as soon as it became aware of it given that the members of the group would not have contracted under the same terms and conditions. Therefore, all consumers who purchased a vehicle between the date Mazda learned that its locking system was defective (October 3, 2006) and the date it launched its special correction program (January 28, 2008), and who were unaware of the defect in the security system, are entitled to claim a reduction of the price pursuant to section 272 CPA. PUNITIVE DAMAGES The Court of Appeal reiterated that violation of a provision of the CPA does not automatically give rise to punitive damages, emphasizing the onerous nature of the burden of proof required in this instance. Agreeing with the judge of first instance, the Court of Appeal stated that an analysis of the facts does not demonstrate that Mazda acted [translation:] “in a deliberate, malicious or vexatious manner, or that its conduct could be characterized as seriously ignorant, reckless or negligent of such a degree of severity” and, hence, the members are not entitled to punitive damages. EXTRACONTRACTUAL DAMAGES (GROUP 1) According to the Court of Appeal, the criminal intervention of a third party did not break Mazda’s chain of responsibility (novus actus interveniens). The protection system of the vehicles was affected by a design weakness, and it is because of that weakness that wrongdoers were able to take advantage of that condition. The damage sustained by members whose vehicles were damaged or stolen is therefore the result of the fault committed by Mazda of not having designed a locking system that could provide [translation:] “a reasonable obstacle against malicious intrusions”. TROUBLE AND INCONVENIENCE The Group 2 members claimed compensation for the inconvenience resulting from Mazda’s recall campaign aiming to correct the defect of the safety system of its vehicles. Now, although the Court of Appeal acknowledged that the campaign may have caused inconvenience, it was of the view that it did not exceed the [translation:] “normal inconvenience suffered by all vehicle owners here and there over the normal course of a year”. From a procedural perspective, the Court again acknowledged that where adjudication of such a claim requires consideration of subjective elements specific to each member of a group, collective action is not the appropriate recourse. Indeed, claims based on inconvenience sustained present highly individual aspects. Referring to the latin maxim de minimis non curat lex, the Court of Appeal noted that it would be inadequate to take up the time of the courts to deal with claims of small consequence. Both groups also claim damages for trouble and inconvenience for having been under the fear that their vehicles would be vandalized and the inconvenience associated with the constant search for safe parking. That claim was dismissed. The Court of Appeal noted that the purpose of compensating a party is not to indemnify all the [translation:] “frustrations and sensitivities associated with the slightest breach by a person with whom that party interacts”. It further noted that considering its individual nature, this type of claim does not readily lend itself to collective indemnification. CONCLUSION The Court of Appeal held that Mazda 3 vehicles for the years 2004 to 2007 were affected by a significant loss of use. However, Mazda has proved that it remedied that effect in its correction campaign (272 (a) CPA). The members of Group 1 may not therefore obtain, in addition to that remedy, additional indemnification in the form of a reduction of their obligation. However, the members of Group 1 are entitled to compensatory damages (272 CPA) pursuant to the independent action for any of the specific remedies provided for in section 272 (a) to (f) CPA. As far as Group 2 is concerned, the Court was of the view that their claims were unfounded. Lastly, in the Court’s view, Mazda had failed to disclose important information to its customers (228 CPA) and that violation of the law allowed certain members in Group 1 and Group 2 to have their obligations reduced (272 CPA), namely those consumers who were unaware of the defect in the security system and who purchased a vehicle between the date Mazda learned that its locking system was defective and the date it launched its special correction program. COMMENTS This Court of Appeal decision clarifies a number of aspects of procedural and substantive law. The Court stated that under the legal warranty a merchant may acquit its obligations in kind, pursuant to section 272 (a) CPA. This shows the importance of swift reaction by a manufacturer who becomes aware of the existence of use affecting a product that it puts on the market. In such cases, the Court imposes stringent transparency obligations on manufacturers, who in return receive a measure of comfort resulting from the preventive or curative measures that they may implement and that will help them eliminate potential liability or reduce it to a minimum. If the Court’s decision is followed, claims for compensation on the grounds that a recall procedure that was launched inconvenienced those affected by the recall, would be disallowed. The importance of informing its customers of defects affecting its products is an integral part of performing the obligation to inform incumbent on all manufacturers and merchants.   2016 QCCA 31. 2014 QCCS 2617.

 This publication was co-authored by Luc Thibaudeau, former partner of Lavery and now judge in the Civil Division of the Court of Québec, District of Longueuil. Lavery closely monitors new developments in consumer law class actions and is committed to keeping the business community informed of the latest developments in this area of the law by regularly publishing newsletters dealing with new case law or legislative changes which may impact, influence, or even transform practices in this area. Over the past 18 months, the Superior Court of Québec, in three class actions1, conducted an analysis of unilateral amendment clauses2in service contracts pertaining to the telecommunications industry. In these decisions, which we will refer to hereinafter as the “Telecom Trilogy”, the Court refused to recognize the validity of the clauses that were submitted to it and ordered the restitution of additional fees paid by consumers pursuant to rate changes. The Court highlighted the importance of disclosing to a co-contracting party the entire range of fees that such party may be called upon to pay over the term of a service contract, including related or additional fees.3The disclosure of fees is subject to strict parameters set out in the provisions of the Consumer Protection Act4 and the Civil Code of Québec.5 These cases reiterate, as a matter of principle, the importance of a fixed-term service contract’s enforceability, with little regard for the inherent risks to which merchants are exposed due to the unpredictability of market conditions. In a fixed-term contract, merchants are generally the ones assuming such risks.6 However, in the context of an indeterminate-term contract, the consumer, upon receipt of the notice of amendment sent by the merchant, must decide whether to accept such amendments and the new terms of the contract or to terminate the contract. UNILATERAL AMENDMENT CLAUSES AND SECTION 12 OF THE C.P.A. In the three cases analyzed by the Superior Court, the service contracts contained clauses allowing for the unilateral amendment by the service provider of certain contractual terms and conditions, including rates and/or usage fees, upon delivery of a 30 days’ written notice.7 In two of those cases, the service provider had introduced new fees that applied to incoming text messages, whereas in the other case, the service provider had set an internet usage allowance system that resulted in increased charges to the user. In all three cases, the service providers had provided their clients with 30 days’ prior notice of the amendments to the terms of the contract. The Court found that the amendment procedure that was followed breached section 12 of the C.P.A., which prohibits merchants from claiming fees from the consumer when they are not precisely indicated in the contract.8 The objective of the provision is to [TRANSLATION] “ensure that the consumer enters into a consumer contract in an informed manner”9, with a clear understanding of the circumstances. The unilateral amendment clauses contained in the service providers’ contracts failed to set out objective criteria specifying the nature or frequency of such future amendments or increases10, which resulted in the consumer being unable to specifically foresee the magnitude of further cost increases that would be added to the obligations already set out in the initial contract. UNILATERAL AMENDMENT CLAUSES AND THE CIVIL CODE OF QUÉBEC In the Laflamme case, the Court also analyzed this issue in the light of the provisions of the C.C.Q.11Article 1373 C.C.Q. states that a prestation arising out of a contract must be “possible and determinate or determinable”. Article 1374 C.C.Q. adds that the prestation “may relate to any property, even future property, provided that the property is determinate as to kind and determinable as to quantity”. In applying these provisions, Justice Nantel determined that a unilateral amendment clause is not automatically invalid, but that in order to be valid, it must contain the following elements: The subject of the modification; and Prior indications, objective criteria and thresholds that [TRANSLATION] “are not solely controlled by the beneficiary of the clause”12 allowing for the co-contracting party [TRANSLATION] “to anticipate the triggering event and the extent of the modification”.13 In Laflamme, the terms of the unilateral amendment clause14 did not make it possible to establish or clearly determine the specific value of the increase in costs which may result from such an amendment to the contract, making such clause illegal under the C.C.Q. UNILATERAL AMENDMENT CLAUSES AND SECTION 11.2 C.P.A. On June 30, 2010, the legislator introduced section 11.2 C.P.A. which, in certain circumstances, allows for the unilateral amendment of consumer contracts where prescribed conditions are met,15 such as the delivery by the merchant of a 30 days’ prior notice to the consumer stating the nature of the amendment, its effective date, as well as the right of the consumer to refuse it and terminate the contract without penalty up to 30 days after the amendment becomes effective. However, under section 11.2 C.P.A., the amendment of an essential element of a fixed-term contract is prohibited, which includes the nature of such goods or services that are the object of such contract, the price of the goods or services or, if applicable, the term of the contract. To date, no court has applied or interpreted section 11.2 C.P.A., which was not applicable in the context of the three class actions discussed above, since the contested clauses were used by the suppliers prior to this provision being passed. However, Justice Paquette, in Martin, commented on the matter.16 She noted that section 11.2 C.P.A. was passed in line, and not inconsistently with section 12 C.P.A. and that its purpose is to consolidate the principle according to which the consumer must not be taken by surprise. She concluded that had section 11.2 C.P.A. been in force when the supplier increased the cost of a service included in the contract, the amendment would have been unenforceable against the consumer since the consumer could not terminate the contract without penalty. Moreover, the amendment was made in respect of the price, which is an essential element of the contract that cannot be modified, notwithstanding section 11.2 C.P.A., given the fact that the contract was for a fixed-term. Although section 11.2 C.P.A. provides for a strict process that merchants must follow when amending the terms of a consumer contract, it appears from the interpretation of the Court in the Telecom Trilogy, that this provision is nevertheless more flexible than articles 1373 and 1374 C.C.Q. Indeed, section 11.2 C.P.A. does not require that a unilateral amendment clause contain [TRANSLATION] “predetermined indications which [...] illustrate the type of amendments which may be brought about” or of the “objective criteria and markers”. Furthermore, section 11.2 does not include any requirement for [TRANSLATION] “the clause [...] to clearly allow the consumer to have detailed knowledge of the amount of the fees which will be charged to him for any given service during the contract”. RECONCILING THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION’S (THE “CRTC”) WIRELESS CODE AND SECTION 11.2 C.P.A. The Wireless Code adopted by the CRTC (the “Code”) came into force on December 2, 2013. It is the result of a series of consultations with various stakeholders of the telecommunications industry and aims to regulate its practices. The Code prohibits telecommunication enterprises from unilaterally amending the main clauses in their service contracts, but not the other terms therein. Nothing is specified in respect of amendments to other terms where they would affect the price. The Code was invoked in two cases, and the Court explicitly dealt with the argument in the Martin case. However, the judges concluded that the Code could not apply to the facts put before them as such facts had occurred prior to its coming into force. Justice Paquette did however mention that the terms of the contract dealing with pay-per-use services, such as text messaging fees, were not considered to be key terms, and could therefore be unilaterally amended pursuant to the Code.17 This interpretation will certainly be the subject of comments and reactions. The interpretation of “principal terms” and “accessory terms” will most likely be the subject of a debate to be closely followed in the coming years. Courts may soon answer these questions as a class action against two other service providers was recently authorized by the Superior Court of Québec, whose decision was upheld by the Court of Appeal.18 THE PENALTIES Merchants who do not comply with section 12 C.P.A. are liable to the penalties listed at section 272 C.P.A.19, including the possibility for the consumer to ask for the termination of the contract and the award of punitive damages. In each of the Telecom Trilogy cases, the Court ordered that the clients be compensated for the additional fees they incurred as a result of the amendments to their contracts. In Union, the Court also awarded punitive damages in favour of one of the subclasses20, since the provider had failed to inform its new clients, who entered into same contracts, of the imminent increase in fees despite the fact that the decision to increase such fees had already been made. In the Court’s opinion, the provider had failed to communicate an important fact, in breach of section 228 C.P.A. This breach, alone, justified the granting of punitive damages for an amount of $500 per member of the subclass. The Court’s award of punitive damages illustrates that a class action award can amplify the C.P.A.’s deterrent force. COMMENTS The Telecom Trilogy reminds merchants that they must disclose the amount of all fees that will be charged to their clients. Furthermore, section 11.2 C.P.A. adds to this principle a number of procedures for merchants to follow when relying on a unilateral amendment clause. These three decisions were appealed. It will be interesting to see whether the Court of Appeal will clarify the scope of section 11.2 C.P.A. and define the conditions under which such provision may cohabit with section 12 C.P.A. We might also wonder if the CRTC’s policy will soften the application of the C.P.A. and give service providers arguments that focus the debate, not on price, but rather on distinctions as to what constitutes “principal terms” versus “accessory terms” of a contract. Other decisions are anticipated in respect of unilateral contractual amendments. We might consider, for example, loyalty programs.21 Indeed, two class actions in which it is alleged that illegal amendments of such programs were made have already been authorized22and a third application was recently filed.23 It is to be expected that the courts will, in a subequent trilogy, provide additional clarifications in respect of the rights and obligations of merchants when amending consumer contracts unilaterally. 1 Laflamme v. Bell Mobilité Inc., 2014 QCCS 525 (2014-02-18), inscription in appeal, 2014-03-18 (C.A.) (“Laflamme”); Martin v. Société Telus Communications, 2014 QCCS 1554 (2014-04-08), inscription in appeal, 2014-05-08 (C.A.) and Application to dismiss the appeal, 2014-05-28 (C.A.) (“Martin”); Union des consommateurs v. Vidéotron s.e.n.c., 2015 QCCS 3821 (2015-08-21) (“Union”). 2 A unilateral amendment clause allows a contracting party, in this case, the service provider, to make changes to a contract prior to its expiry. 3 It is to be noted that the qualification of such fees (related or additional) has yet to be analyzed. 4 CQLR, c. P-40.1 (“C.P.A.”), sections 11.2 et 12. 5 CQLR, c. C-1991 (“C.C.Q.”), articles 1373 et 1374. 6 Subject to the distinctions discussed in this article. 7 Each of the service contracts contained terms such as “upon not less than 30 days notice”, “subject to a minimum notice period of 30 days”, or “after having provided you with a 30 day notice”. 8 Laflamme, par. 46. 9 Martin, par. 37. 10 Martin, par. 38. 11 One of the subclasses of the class action was not composed of consumers within the meaning of the C.P.A. 12 Garderie éducative La Souris Verte inc. v. Chrétien, 2010 QCCS 4843, par. 49, cited in Laflamme, par. 66. 13 Laflamme, par. 66. 14 The clause was drafted as follows: “We will not increase your basic monthly voice Plan or excess airtime charges during the course of the commitment period, provided that you remain eligible, throughout the entire commitment period, for the Plan and the services you have chosen. (...) During the term, we may increase other charges (including network access fees), and may also charge additional fees after having provided you with a 30 day prior notice”. (Laflamme, par. 33.) 15 Sections 11.2 and 12 C.P.A. apply to all types of consumer contracts. We are only discussing their application within the context of telecommunications service contracts; however the basic principles remain the same, regardless of the type of contract, with the exception of variable credit contracts pursuant to section 129 C.P.A., to which the rules set out in section 11.2 C.P.A. do not apply. 16 Martin, par. 59-63. 17 Martin, par. 67. 18 Amram v. Rogers Communications inc. (and Fido Solutions inc.), 2012 QCCS 4453. Leave to appeal granted for the sole purpose of modifying some paragraphs of the judgment in the first instance, 2015 QCCA 105. Leave to appeal to the Supreme Court dismissed (S.C.C., 2015-09-24). 19 For further information concerning the application of this section, please see our newsletter Need to Know published in August 2015: https://www.lavery.ca/en/publications/our-publications/1882-nouveautes-en-droit-de-la-consommation.html. 20 The subclass consisted of members who had subscribed to an extreme high-speed internet plan after June 28, 2007. 21 For a brand, business or an organization, consumer loyalty management is the art of creating and managing a durable personal relationship with each of its clients, particularly by awarding them benefits such as discounts or gifts once they have accumulated points earned through previous purchases. 22 Option consommateurs v. Corporation Shoppers Drug Mart, 2012 QCCS 1078; Neale v. Groupe Aéroplan inc., 2012 QCCS 902. 23 Proceedings filed against the Toronto Dominion Bank on July 17, 2015: https://services.justice.gouv.qc.ca/DGSJ/RRC/DemandeRecours/DemandeRecoursRecherche.aspx..

 This publication was authored by Luc Thibaudeau, former partner of Lavery and now judge in the Civil Division of the Court of Québec, District of Longueuil. Lavery closely monitors the development of class actions dealing with consumer law and is committed to keeping the business community informed of the latest developments in this area of the law by regularly publishing newsletters dealing with new case law or legislative changes which may impact, influence, even transform the practices in this area. The courts of Quebec recently dealt with two issues of interest in the context of two class actions instituted by consumers. The courts: interpreted sections 271 and 272 of the Consumer Protection Act (C.P.A.)1, ruling that a violation of the provisions of the C.P.A. does not systematically give rise to the remedies provided under these two sections, and thereby limiting the remedies available to consumers; and noted that they are flexible in their interpretation of the requirements for authorizing a class action under article 1003 of the Code of Civil Procedure (C.C.P.)2, in particular, in circumstances where it is evident that a significant number of consumers may be members of the group, there is less of a need for the plaintiff to take steps to specifically identify the members as the merchant likely possesses all the relevant information that the court will need to identify the potential members of that group. Breach of an obligation arising from the C.P.A. and possible remedies pursuant to sections 271 or 272 In March 2015, the Superior Court of Québec clarified the scope of sections 271 and 272 C.P.A. in the case of Lacasse v. Banque de Nouvelle-Écosse3. The applicant was seeking the authorization to institute a class action on behalf of all the consumers who had a motor vehicle financed by the Bank of Nova Scotia (the “Bank”) in Quebec since November 22, 2010. The remedy in respect of which the authorization was sought aimed to obtain the reimbursement of the death and disability insurance premiums paid, as well as punitive damages on the grounds that the Bank had failed to treat such insurance premium as a credit charge and, accordingly, had not calculated the credit rate in the contract in accordance with sections 70 (b), 71 and 72 C.P.A. and 54.1 of its implementing regulation. The applicant maintained that this constituted a breach of section 272 C.P.A. While acknowledging that the contract did not disclose the credit rate as a percentage, the Bank argued that this constituted a requirement as to form, that instead section 271 applied, and that the Bank could thus raise in defence the fact that the consumer had suffered no prejudice. Ms. Justice Danielle Mayrand agreed with the Bank and dismissed the motion on the grounds that the applicant had suffered no prejudice. She noted that [TRA NSLATIO N] “section 271 sanctions the failure to comply with requirements as to form at the time of the formation of the consumer contract (for which the consumer may demand the nullity)”4 while section 272 C.P.A. applies to [TRA NSLATIO N] “substantive obligations governing the behaviour of the merchant, irrevocably deems the actions stemming from the behavior to cause a prejudice to the consumer, and authorizes much harsher sanctions such as punitive damages.”5The judge concludes that the applicant had failed to demonstrate that the Bank had contravened section 272 C.P.A.; the omission to calculate and disclose the credit rate in the contract is a breach of paragraph 2 of section 271 C.P.A. which governs the form of a contract of credit. Furthermore, the applicant had not proved that she had suffered a prejudice related to the failure to disclose the credit rate in the contract. In the circumstances of the case, since the interest rate applicable to the amount of the premium was 0%, the failure to disclose the credit rate had no effect on the amount the applicant paid. The applicant had entered into the insurance contract with full knowledge and could neither maintain that she was misled by such omission nor maintain that she would not have entered into the contract if the credit rate had been properly disclosed. COMMENTS While the Court of Appeal recently noted that different facts give rise to each of the remedies under sections 271 and 272 C.P.A. and that their mutually exclusive nature gives to the consumer the choice as to which remedy to pursue,6 the Court in Lacasse limits the scope of this choice, reminding us that not all breaches by a merchant constitute the violation of a substantive obligation giving rise to the remedies under section 272 C.P.A. Merchants who enter into contracts with consumers must remain mindful of the consequences of remedies based on section 271 and 272 C.P.A., such as compensatory and punitive damages, but must also know that the nature of the alleged breach sets up their remedy, and that defences under section 271 C.P.A. are available, as said section does not create an irrevocable presumption of prejudice. Criteria for instituting a class action in the context of the C.P.A. In the case of Martel v. Kia Canada Inc.,7 the main goal of the appellant was to purchase an economy car. Nevertheless, her dealer recommended preventive maintenance on account of the rigorous climate of Quebec in addition to the maintenance described in the “Normal Maintenance Program” set out in the owner’s manual she had been provided with when purchasing the vehicle. The appellant performed the preventative maintenance for the purpose of keeping the manufacturer’s warranty in good standing, but she considered that she had purchased the vehicle on the basis of misleading information and filed a motion to be authorized to institute a class action. The trial judge dismissed her motion on the ground that she had failed to demonstrate that all conditions of article 1003 (a), (c) and (d) C.C.P. were satisfied. As to article 1003 (c) and (d), the judge reproached her for not having attempted to search for other consumers who had suffered a similar prejudice and could have been included in the group. The court found that she had not demonstrated the existence of a group whose members would have similar issues to raise before the courts and whom she was nonetheless seeking to represent. The Court of Appeal of Quebec allowed the appeal and repeated what had been said in Fortier v. Meubles Léon8, that is, that the legal and evidentiary thresholds to get past the authorization stage before the Quebec courts are rather low. The Court of Appeal relied on the principles set out by the Supreme Court of Canada in the cases of Infineon9 and Vivendi10, according to which [TRANSLATION] “The judge’s function at the authorization stage is one of screening motions to ensure that defendants do not have to defend against untenable claims on the merits”11, meaning that the applicant has demonstrated serious colour of right and that he or she has a defendable case. Therefore, the burden at the authorization stage is not one of proof but rather only of demonstration. Furthermore, all the members of the group are not required to view the prejudice suffered in the same way. The assessment of the prejudice for authorization purposes is objective and not subjective in respect of each consumer involved in the action. Thus, the appellant was not required to demonstrate that the decision to purchase the vehicle or not was based in any way on the fact that the frequency of preventive maintenance was an important criteria for her, but also for other consumers of this same vehicle. The Court of Appeal also relied on this occasion on a principle derived from the case of Lévesque v. Vidéotron12 suggesting that the higher the number of consumers in a similar situation the more it is proper to draw some inferences, more particularly to presume that the merchant who is sued [TRANSLATION] “possesses the data necessary to estimate the number of consumers affected by the action and that [the merchant] is in the best position to identify them”13. COMMENTS This decision of the Court of Appeal follows the trend from the last few years whereby the requirements of article 1003 C.C.P., reviewed at the stage of the class action authorization, must be analysed in a flexible and liberal manner. Thus, it seems that in certain cases, an applicant who seeks authorization to institute a class action will not be required to show that he or she took steps to identify consumers who dealt with the merchant in similar circumstances. 1 Consumer Protection Act, CQLR c. P-40.1. 2 Code of Civil Procedure, CQLR, c. C-25. 3 2015 QCCS 890. 4 Lacasse v. Banque de Nouvelle-Écosse, 2015 QCCS 890, par. 22. 5 Id., par. 25. 6 Dion v. Compagnie de services de financement Primus, 2015 QCCA 333. 7 2015 QCCA 1033. 8 Fortier v. Meubles Léon, 2014 QCCA 195, par. 65-70; cited in Lacasse c. Banque Nationale de Nouvelle-Écosse, préc., note 3. 9 Infineon Technologies AG v. Option consommateurs, 2013 CSC 59, par. 59-61. 10 Vivendi Canada Inc. v. Dell’Aniello, 2014 CSC 1. 11 Prec., note 10, par. 37. 12 Lévesque c. Vidéotron s.e.n.c., 2015 QCCA 205, par. 27. 13 Prec., note 7, par. 35.

In a decisive victory for the Plaintiffs in class actions against the three Canadian leading tobacco companies1, the Québec Superior Court ordered the Defendants to pay more than 15 billion dollars in moral damages2 and punitive damages. There were more than 253 hearing days3 and 16 years of proceedings. THE ACTIONS In February 2005, Justice Pierre Jasmin authorized two class actions against JTI-Macdonald (JTM), Imperial Tobacco (ITL) and Rothmans, Benson & Hedges (RBH). The first class represented by Cécilia Létourneau, was instituted on behalf of 918,000 smokers addicted to cigarettes. They claimed $5 000 per member as moral damages and $5 000 as punitive damages. The other class action introduced by the Conseil québécois sur le tabac et la santé (CQTS), and more widely known as the Blais case, was instituted on behalf of nearly 100,000 smokers and ex-smokers who had developed lung and throat cancer or emphysema. The amount claimed was of $100,000 in moral damages and $5,000 in punitive damages per class member. The Plaintiffs had waived any right to make individual claims for compensatory damages. The two class actions, spanning between 1950 and 19984, were joined for trial. THE JUDGEMENT In a 276 pages decision, Justice Brian Riordan ruled that the Companies had knowledge of the harm caused by smoking, deliberately withheld critical information and knowingly made false and misleading public statements. The Court reviewed the conduct of each Company and found as follows: The Companies manufactured and sold a product which was hazardous and harmful to the health of the consumers. The Companies had knowledge of the risks and dangers associated with the use of its product. The Companies trivialized the risks and dangers of smoking and failed to disclose information on the subject during the entire duration of the class proceedings. Beginning in 1962, the Companies conspired to prevent users of their products from becoming aware of the inherent hazards of such use. The Companies interfered with the right to life, personal security and inviolability of the Class Members, intentionally, prioritizing profit over health. FAULT The Companies were found to have engaged in serious misconduct under the Civil Code of Québec, the Consumer Protection Act (CPA) and the Charter of Human Rights and Freedoms, thus incurring liability for moral and punitive damages. The Court found that the companies: Contravened their general duty not to cause injury to another person5. Contravened the duty of a manufacturer to inform its customers of the risks and hazards involved in using its products6. Unlawfully interfered with a right under the Quebec Charter7. Engaged in a prohibited practice under the CPA8. PARTIAL EXONERATION Knowledge by a consumer of a product’s defect and its continuous use can release the manufacturer of its liability9. However, Justice Riordan specified that in the case of products hazardous to the physical well-being of the consumers, the test to assess public knowledge is more “stringent” and requires higher standards. Despite warnings on tobacco packages since 1972, such statements were found to be incomplete and insufficient by the Court. The Court determined that, as of January 1, 1980, consumers knew or should have known the risk of contracting tobacco related diseases10, and, as of March 1, 1996, of the risks of becoming addicted to tobacco. Therefore, members who started and continued after these periods11 committed a contributory fault. The Court apportioned 80% of the liability after the above dates to the Companies and 20% to the members. CAUSATION The Court concluded that faults committed by the Companies caused members to smoke. Justice Riordan favoured the “it-stands-to-reason” test stating that the presence of other external factors leading to smoking did not have the effect of discharging the Companies from their liability. It was found that presumptions were not required to eliminate all other possibilities insofar as the Plaintiffs had shown that the Companies’ faults led in a logical, direct and immediate way to the members’ smoking. With respect to the Blais case, Justice Riordan agreed that epidemiological evidence is sufficient to prove individual causation of tobacco related disease. He however specified that this evidence is permitted because of the application of article 15 of the Tobacco-Related Damages and Health Care Costs Recovery Act12 which allows causation to be proved “on the sole basis of statistical information”. DAMAGES The Court orders collective recovery (aggregate damages) if the evidence allows for an assessment of the total amount of members’ claims with sufficient accuracy13. For the Letourneau case, despite the fact that the three components of liability were found to be present, the Court did not allocate moral damages because the evidence did not allow for sufficient accuracy among class members as to the nature and degree of such damages. For the Blais case, the Court awarded solidary moral damages in the amount of $6,858,864,00014. The respective liability of the Defendants was established to be 67% for ITL, 20% for RBH and 13% for JTM. In addition, The Court found that all three companies had engaged in a reprehensible conduct which warranted an award of punitive damages against them under both the Quebec Charter and the CPA. In light of the parties’ conduct and their ability to pay, the judge ordered the Defendants to pay $1,31 billion in punitive damages15 to the members of the two classes based on one year of before-tax profits for each Defendant. It should be noted that in Quebec, in cases of collective recovery where individual liquidation is ordered, the Court has discretion to not return the unclaimed portion to the Defendants. It disposes of the unpaid funds taking into consideration the interest of the members16. The balance is usually allocated as a Cy-Près donation to non-profit organizations whose activities are related to the interests of the class members. INITIAL DEPOSIT A judgement ordering a collective recovery of claims orders the debtor either to deposit the established amount, or to carry out a determined reparatory measure, or both. In order to ensure that the victims would be compensated and suspecting that the Companies would not remain in business if they deposited the full amount, the Court fixed an initial deposit of $1 billion. Should these amounts be insufficient, the judge reserved the right for the Plaintiffs to request additional sums. PROVISIONAL EXECUTION NOTWITHSTANDING APPEAL Considering the exceptional nature of this case, the Court approved the plaintiffs request for a partial provisional execution of the damages awarded. The judge pointed out that the case had begun 17 years ago and that an appeal could take up to 6 years. Meanwhile, since smoking affects the physical well-being of consumers, it was deemed to be in the interest of justice that they be compensated as soon as possible. Therefore the judge ordered provisional execution in the next 60 days, regardless of an appeal, of an amount equal to its initial deposit for moral damages in addition to both condemnations of punitive damages representing more than $1 billion. The judge will decide at some later date how to distribute these funds. CONCLUSION The defendants have already issued statements announcing their intention to appeal the decision and ask the Court of Appeal to set aside the provisional execution order. It should be noted that at least seven similar class actions are ongoing in Canada as well as 10 healthcare cost recovery lawsuits. The amount claimed in many of these cases exceeds even the amount awarded by the Québec Superior Court. This is the first class action case in which class members obtain an award in a tobacco case in Canada. Certification for a similar class action in Ontario was dismissed in 2004 in the Caputo case17. It remains to be seen how all these cases will play out and how they will eventually relate to each other. SUMMARY TABLES OF DAMAGES AWARDED18 COMPANY MORAL DAMAGES BLAIS PUNITIVE DAMAGES BLAIS PUNITIVE DAMAGES LÉTOURNEAU ITL $670,000,000 $30,000 $72,500,000 RBH $200,000,000 $30,000 $46,000,000 JTM $130,000,000 $30,000 $12,500,000   MORAL DAMAGES LIABILITY Blais Member who started smoking before January 1, 1976 Companies – 100% Blais Member who started smoking from January 1, 1976 Companies – 80% / Member 20% Létourneau Member who started smoking before March 1, 1992 Companies – 100% Létourneau Member who started smoking as of March 1, 1992 Companies – 80% / Member 20%   PUNITIVE DAMAGES LIABILITY Blais claim accruing before November 20, 1995 Prescribed Létourneau claim accruing before September 30, 1995 Companies – 100% Blais claim accruing as of November 20, 1995 Companies – 100% Létourneau claim as of September 30, 1995 Companies – 100%   _________________________________________ 1 Létourneau v. JTI-MacDonald Corp. (C.S., 2015-05-27), 2015 QCCS 2382. 2 Commonly referred to as non-pecuniary damages. 3 The trial stage began on March 12, 2012 and ended on December 11, 2014. 4 Date on which the motions for authorization were served. 5 Art. 1457, Civil Code of Québec. 6 Art 1468 and following of the CCQ. 7 Art 1 and 49 of the Charter of human rights and freedoms. 8 Art 219 and 228 of the Consumer Protection Act. 9 Art. 1473 CCQ. 10 Lung and throat cancer or emphysema. 11 The Court ruled that it takes approximately 4 years to become dependent to smoking. Therefore Blais Class Members who started to smoking after January 1, 1976 and Letourneau Class members who started smoking after March 1, 1992 and that continued smoking after theses dates must share liability. 12 Art. 15 Tobacco-Related Damages and Health Care Costs Recovery Act ch.R-2.2.0.0.1 (Qc) of 2009; In an action brought on a collective basis, proof of causation between alleged facts (...) may be established on the sole basis of statistical information or information derived from epidemiological, sociological or any other relevant studies, including information derived from a sampling (...). 13 Art. 1031 CCQ. 14 Once interest and the additional indemnity of the Civil Code are added, this sum increases to $15,500,000,000. 15 The judge decided that the circumstances justified that 90% of the total punitive damages go to Blais members and 10% to Létourneau members. Considering the amount allocated for moral damages in the Blais file, the Court made a symbolic award and ordered each company to pay $30,000 in punitive damages which represents one dollar for each Canadian death this industry causes every year. 16 Art 1036 CCP. 17 Caputo v. Imperial Tobacco Ltd., 2004 24753 (ON SC). 18 Tables 910 and 1113 of the decision.

This publication was authored by Luc Thibaudeau, former partner of Lavery and now judge in the Civil Division of the Court of Québec, District of Longueuil. On September 19, 2014, the Supreme Court of Canada issued its ruling in the so called “banks’ cases”1, in the context of which consumers instituted class actions to recover the conversion fees charged on credit card transactions in foreign currencies by many institutions issuing such cards. The plaintiffs were maintaining that these charges were contravening the Consumer Protection Act (Quebec) (the “CPA”).  In these decisions, the Supreme Court had to rule, among other things, on the following issues:   1) The necessity for class representatives in class actions to have a direct cause of action against each defendant in order to have the required standing to sue all of them; 2) Whether the CPA applies to banks in view of The Constitution Act, 1867; 3) The right of the class members to obtain the reimbursement of the conversion fees they had paid and, in the case of some of the banks, the payment of punitive damages. As to the first question, the Court decided that the class representatives had the standing to sue all the banks, noting that the Code of Civil Procedure (Quebec) (the “CCP”) allows the exercise of a class action even where the representative does not have a direct cause of action against or a legal relationship with each defendant where the remedy allows for getting a similar result in the case of each defendant. As to the second question, the Court examined whether sections 12 and 272 of the CPA, which apply to the disclosure of the charges in question and set out the possible remedies in the event these obligations are not complied with, impair the federal jurisdiction over banks. The Court was of the view that a disclosure requirement for certain charges ancillary to one type of consumer credit neither impairs nor significantly trammels the manner in which Parliament’s legislative jurisdiction over bank lending can be exercised. Accordingly, since the Court concluded that the banks had in fact contravened the provisions of the CPA and that such law applied to them in this respect, it decided that the class members should be granted a reduction of their obligations equal to the conversion fees charged during the period when they were not disclosed in accordance with the CPA. Lastly, the Court ordered some of the defendant banks to pay punitive damages to class members since, in its view, they contravened the CPA for many years without explanation, likening this behavior to a lax, passive or ignorant attitude in respect of consumer rights and their own obligations, or to a behavior tantamount to ignorance, carelessness or serious negligence. Lavery will shortly publish a more detailed analysis of these three decisions, which will certainly have a significant impact on consumer law and the application of some principles which apply to class actions as a procedural vehicle. _________________________________________ 1 Bank of Montreal v. Marcotte, 2014 SCC 55, Amex Bank of Canada v. Adams, 2014 SCC 56, and Marcotte v. Fédération des caisses Desjardins du Québec, 2014 SCC 57 

In December 2010, the federal Parliament passed the Act to Promote the Efficiency and Adaptability of the Canadian Economy by Regulating Certain Activities1 that Discourage Reliance on Electronic Means of Carrying out Commercial Activities, better known as the “Canada’s Anti Spam Legislation” (CASL or the “Act”). The purpose of the Act is mainly to protect Canadian consumers and businesses against unsolicited spam messages, false or misleading commercial representations, malicious software and other electronic threats. It is scheduled to come into force on July 1, 2014. The new regime is based on a opt-in mechanism rather than through exclusion. As such, after July 1st, sending a commercial electronic message will be prohibited unless the recipient has consented to receiving it. Canadian businesses using electronic mail or social networks to inform and solicit customers will therefore have to review their practices in order to comply with the law, failing which they will be liable to administrative penalties and civil suits. However, transition measures are provided to give businesses time to adjust their practices.The definition of “commercial electronic message” within the meaning of the Act is wide and covers all electronic messages, including text messages (commonly called SMS), sound, vocal or visual messages in respect of which it is reasonable to conclude that their purpose is to encourage participation in a commercial activity. For instance, an electronic message which promotes an offer to purchase, sell or rent a product or a service constitutes a commercial electronic message covered under the Act. Such is also the case for an electronic message promoting a person as a purchaser, seller or renter of a product or service or involved in the areas of business, investment or gaming.Since non commercial activities are not covered under the Act, it must be noted that political parties, charitable organizations and corporations conducting market studies or surveys are generally not covered under the Act, unless their electronic messages are related to the sale or promotion of a product.Furthermore, the Act provides for many exceptions, such as messages sent between persons having a personal or family relationship or commercial electronic messages responding to a recipient who requested information on prices or estimates for the provision or delivery of goods, products or services.For the time being, the prohibition does not cover verbal communications by phone, which are currently governed by the Telecommunications Act2, particularly through the National Do Not Call List. However, this exception may be revoked by order-in-council if the government deems it appropriate.EXPRESS OR IMPLIED CONSENT OF THE RECIPIENTThe required consent for sending a commercial electronic message may be express or implied. The situations where the sender of such a message may rely on the implied consent of the recipient are set out in the Act. For instance, the Act provides that there is implied consent where the sender and the recipient have or had an ongoing business relationship within the two years preceding the date the message is sent. The same applies where the recipient asked the sender about products, goods or services during a 6-month period preceding the date of the message.The consent of the recipient is also implied if he or she has conspicuously published his or her electronic address without adding a statement whereby the recipient does not wish to receive unsolicited commercial electronic messages, to the extent that the message is relevant to the recipient’s employment or business or functions in such business.The consent is also implied where the recipient communicated his or her electronic address to the sender without indicating that he or she does not wish to receive unsolicited commercial electronic messages, again to the extent that the message is relevant to the recipient’s employment or business or functions in such business.Lastly, the existence of private relationships between the sender and the recipient within the two-year period immediately before the day on which the message is sent also allows for inferring the implied consent of the recipient to a commercial electronic message being sent in the cases provided in the Act.In all other cases where the Act does allow for inferring an implied consent, the express consent of the recipient is required for sending a commercial electronic message. Such consent is not presumed and the burden of proof lies with the sender.To obtain this consent, the sender must set out clearly and simply the purposes for which the consent is being sought and also the information that identifies the person seeking consent (or if the person is seeking consent on behalf of another person, information that identifies that other person). The scope of information which is required to be provided to identify the person seeking consent is set out in the regulations.It is important to note that after July 1st, a request for consent will in itself constitute a commercial electronic message. It will therefore not be possible to request such consent using an electronic mean, subject to certain exceptions.MECHANISM FOR WITHDRAWING CONSENT AND FORM OF COMMERCIAL ELECTRONIC MESSAGESThe Act provides that any person sending a commercial electronic message to another person must implement an unsubscribe mechanism allowing the recipient to withdraw his or her consent to receive commercial electronic messages from that sender. The sender must allow the recipient to express his or her will by electronic means, either by electronic mail or through a website, without cost and at any time. The sender must give effect to any withdrawal within a 10-day period.The description of this withdrawal mechanism must appear in the commercial electronic message which must, in addition, include information that identifies the person who sends the message or, if the message is sent on behalf of another person, the information that identifies the person who sends the message and the person on whose behalf it is sent. The commercial electronic message must also indicate the postal address and either the phone number to reach a service agent or a voicemail service, or the electronic mail address or the address of the website of the person who sends the message or, if applicable, the address of the website of the person on whose behalf it is sent.If it is practically impossible to include this information and the withdrawal mechanism in the commercial electronic message, they may be posted on an easily accessible web page without charge to the recipient through a link indicated clearly and prominently in the message.ADMINISTRATIVE PENALTIES AND PRIVATE RIGHT OF ACTIONThe Act provides for severe penalties for persons who fail to comply with its provisions. Contraveners are liable to administrative monetary penalties of up to $1,000,000 in the case of an individual, and $10,000,000 in the case of any other person.Furthermore, the existence of a private right of action against the sender of an unsolicited commercial electronic message constitutes a crucial point of this new regime. The Act allows any person suffering a loss or harm as a result of non-compliance with the provisions of the Act by the sender of a commercial electronic message to apply to a court of competent jurisdiction for a judgment ordering the sender to pay him or her the amount of such damages, plus liquidated damages of up to $1,000,000. For instance, the recipients of a spam message who suffer damages after relying on misleading information found therein may institute a class action to pursue their common claims on the basis of this new Act.CONCLUSIONUnsolicited electronic messages are a nuisance which warrant action. Canada is the only G8 jurisdiction which had not yet taken specific measures to regulate or prohibit spam messages. However, the obligation to obtain the consent of the recipients of commercial electronic messages, who in most cases have nothing to do with the spam messages, will constitute a difficult and costly burden for many businesses.It is therefore important that businesses review their electronic mailing lists to ensure that they comply with the provisions of the Act, namely, that the persons whose names are included have given their express consent to receive commercial electronic messages from the businesses or that the businesses can rely on the implied consent of such persons, failing which the businesses will have to obtain adequate consents. Again, contravening businesses will be liable to substantial penalties and claims which may exponentially increase through class actions involving hundreds if not thousands of recipients who allege that they suffered damages._________________________________________1 S.C. 2010, c. 23.2 S.C. 1993, c. 38.

On February 20, 2014, the Supreme Court of Canada allowed the motion for leave to appeal the judgment of the Court of Appeal of Québec rendered in the case of Theratechnologies inc. v. 121851 Canada Inc.1. In this unanimous judgment, the Court of Appeal decided that a judgment authorizing a class action based on section 225.3 of the Securities Act (Quebec)2 may be appealed, contrary to the current rules under the Code of Civil Procedure (hereinafter, the “CCP”), which does not authorize the appeal of a judgment allowing a motion to institute a class action.More details on this judgment of the Court of Appeal are available in our newsletter In Fact and In Law Express entitled “An unprecedented decision of the Court of Appeal: a judgment authorizing a class action under the SA may be appealed” authored by Sophie de Saussure, Josianne Beaudry and Jean-Philippe Lincourt.The upcoming judgment of the Supreme Court of Canada will be all the more interesting since the Act to establish the new Code of Civil Procedure was assented to on February 21, 2014 and makes some changes respecting class actions, including that to allow the appeal with leave of a judgment allowing a motion to institute a class action. Lavery will shortly publish a bulletin discussing these modifications.________________________________1 2013 QCCA 1256. 2 R.S.Q., c. V-1.1.

On February 20, 2014, the Quebec National Assembly passed Bill 28, An Act to establish the new Code of Civil Procedure.This is a watershed moment in a process that began in 2003 and was the subject of a review by the Minister of Justice in 2006. Notably, promoting cooperation by the parties on the conduct of proceedings and increasing reliance on case management conferences are meant to improve access to justice.In a brief filed in 20111, the Quebec Bar underscored that high costs and long delays constituted significant barriers to justice in many cases.It goes without saying that class actions constitute a preferred measure for accessing justice and an effective way to enforce one’s rights, particularly for small claims, as they are both effective and efficient.In this new interation of the Code of Civil Procedure (C.C.P.), the Special rules for class actions are found in Book VI, title III, articles 571 to 604. They will replace current articles 999 through 1051 C.C.P.Here is an overview.THE CLASS ACTION (ARTICLE 571 C.C.P.)Looking to the English moniker, the legislator has opted for the name “action collective”. The Bar had suggested that it would be better to retain the current notion of “recours collectif” because it is known to the public and will yield more results in web searches. We share this opinion and are also of the view that keeping the name would have ensured consistency, as it is very familiar to both the public and practitioners and has been in use since 1978.CLASS MEMBERS: THE “NO MORE THAN 50 EMPLOYEES” RULE IS GONEAmong the significant new features, the new article 571 C.C.P. does away with the condition found in article 999 C.C.P. whereunder a legal person established for a private interest, partnership or association may only be a member of a class if at all times during the 12-month period preceding the motion for authorization, it had no more than 50 employees.“ 571. A class action is a procedural means enabling a person who is a member of a class of persons to sue, without a mandate, on behalf of all the members of the class and to represent the class.In addition to natural persons, legal persons established for a private interest, partnerships and associations or other groups not endowed with juridical personality may be members of the class.A legal person established for a private interest, a partnership or an association or another group not endowed with juridical personality may, even without being a member of a class, ask to represent the class if the director, partner or member designated by that entity is a member of the class on behalf of which the entity is seeking to institute a class action, and the designee’s interest is related to the purposes for which the entity was constituted.”Quebec is currently the only Canadian jurisdiction which prevents businesses with more than 50 employees from being part of a class action, thereby depriving them of the opportunity to exercise their rights in this way. This is unfortunate, particularly in respect of claims based on section 36 of the Competition Act alleging anti-competitive practices or in the area of securities class actions. In the past, since they were barred from instituting class actions, some small and medium-sized businesses and cooperatives had to choose between filing their own proceedings or joining a class action outside Quebec.The new Code will allow a legal person established for a private interest, a partnership or an association to be a class representative on the sole condition that it be a member of the class. In addition, even if it isn’t a class member, it will be allowed to act as a representative if one of its directors, partners or a member it designates is a class member and the designee’s interest is related to the purposes for which the legal person, partnership or association was constituted. This is how a consumer advocate such as Option Consommateur can bring a class action to enforce the Consumer Protection Act. All it needs is a designated person who states his or her personal cause of action against the respondent, as article 1048 C.C.P. currently requires.MULTI-JURISDICTIONAL CLASS ACTIONS (ARTICLE 577 C.P.C.)Another new feature: the legislator deemed it useful to make rules for multi-jurisdictional class actions, which involve an often complex assortment of overlapping claims that are sometimes concurrent and, on other occasions, filed by the same law firm in more than one Canadian jurisdiction. They often involve the same parties, cause and object, which can lead to a situation of international lis pendens, not to mention the risk of contradictory judgments.“ 577. The court cannot refuse to authorize a class action on the sole grounds that the class members are part of a multi-jurisdictional class action already under way outside Québec.If asked to decline jurisdiction, to stay an application for authorization to institute a class action or to stay a class action, the court is required to have regard for the protection of the rights and interests of Québec residents.If a multi-jurisdictional class action has been instituted outside Québec, the court, in order to protect the rights and interests of class members resident in Québec, may disallow the discontinuance of an application for authorization, or authorize another plaintiff or representative plaintiff to institute a class action involving the same subject matter and the same class if it is convinced that the class members’ interests would thus be better served.”In principle, a Quebec court cannot deny an application for a class action for the sole reason that members of the class are involved in a class action pending outside Quebec. That is consistent with the approach generally taken by Quebec courts.The legislator now sets out criteria the court must take into account prior to making a decision, thus linking up with articles 3135 and 3137 of the Civil Code of Québec (C.C.Q.), which set out the private international law rules respecting jurisdiction and lis pendens.In addition, the court is required to take into consideration the protection of the rights and interests of Quebec residents if and when it is asked to decline jurisdiction or suspend a motion for authorization to institute a class action in Quebec. This new requirement of article 577 C.C.P. is intended to further circumscribe the discretion of the judge dealing with a motion to stay.It is apparent that the legislator wishes to favour proximity justice by causing a judge from Quebec to rule on the rights of class members who are Quebec residents, all the more so when such rights involve the application of public interest rules in fields such as insurance law, labour law and consumer law. In fact, the legislator wants to avoid a situation where a judge from another jurisdiction would rule on the rights of Quebec residents subject to such legislation and grouped in a subclass, which may be the case if a Quebec class action were stayed in favour of proceedings conducted elsewhere in Canada.Judges of the Quebec Superior Court already enjoy broad discretion in this regard. They may even, under certain circumstances, deny a motion to stay the Quebec proceedings if they are of the view that the interests of the Quebec members, even in an international lis pendens situation, will be better served if the motion is denied. This was recently the case in Choquette c. Atlantic Power Corporation.2Similarly, per article 577, parag. 3 C.C.P., the court will grant a motion for the discontinuance of an application for authorization filed in Quebec (to make way for proceedings instituted elsewhere) only if it is convinced that the interests of Quebec residents who are members of the class will be better served thereby. Note that such discretion already exists since current article 1016 C.C.P. provides that the representative cannot discontinue the class action without permission from the court.The Quebec Bar expressed doubt regarding the need for C.C.P. article 577 and the usefulness of adopting rules on multi-jurisdictional class actions. It noted that the court now has all the powers it needs to suspend review of a motion for authorization, particularly pursuant to the international private law rules found in C.C.P. articles 3076 and following. But the legislator obviously wishes to more clearly circumscribe the discretion of the judge, who will henceforth not be allowed to grant a motion to stay a class action brought in Quebec or the discontinuance thereof unless it is demonstrated that such an application is not contrary to the interests of justice and that the interests of the Quebec members will be better served if the class action is allowed to proceed in a jurisdiction other than Quebec.RIGHT OF APPEAL AT THE AUTHORIZATION STAGE (ARTICLE 578 C.C.P.)Current article 1010 C.C.P. prevents a respondent from appealing a judgment authorizing a class action, while the applicant may appeal as of right a judgment dismissing its application. This is a major irritant for respondents, particularly since they used to have a right of appeal and it was taken away in 1982.For many years the Quebec Bar expressed the wish that respondents be given the right to apply for leave to appeal from judgments authorizing the institution of a class action, such applications to be subject to the rules governing appeals from interlocutory judgments. This wish has now been granted.Although the right of appeal remains asymmetric, this new rule will promote equitable access to the Court of Appeal to any party having an issue to be decided which is important and of interest.“ 578. A judgment authorizing a class action may be appealed only with leave of a judge of the Court of Appeal. A judgment denying authorization may be appealed as of right by the applicant or, with leave of a judge of the Court of Appeal, by a member of the class on whose behalf the application for authorization was filed.The appeal is heard and decided by preference.”This appeal upon leave will allow better screening of class actions since respondents will be in a position to make their case to the Court of Appeal as to why the proceedings are doomed to fail. The position of the Court of Appeal will thus be known sooner, without having to go to trial on the merits as is currently the case, which may translate into savings on judicial resources. This will also allow for greater harmonization with the class action legislation of the other Canadian provinces, particularly that of Ontario, where the same rule applies, that is, an appeal upon leave3, and that of British Columbia, where there is an appeal as of right for both parties4.We believe that the reinstatement of the right to appeal for the respondent is unlikely to hinder the legislator’s objective of timeliness, all the more so since article 578 C.C.P. provides that the appeal, if authorized, must be heard and decided by preference. The argument whereunder granting the respondent the right to appeal upon leave will slow down class actions is weakened when one considers that in Quebec, class actions are automatically referred to case management by a Superior Court judge, which practically eliminates any risk of things getting bogged down.INDEMNITY TO THE REPRESENTATIVE PLAINTIFF (ARTICLE 593 C.C.P.)In ruling on the merits of a class action or an application for approval of a settlement, the court will award the representative plaintiff, if successful, an indemnity for disbursements, legal costs and his or her lawyer’s professional fees out of the amount recovered collectively and before payment of individual claims. If the action is dismissed, the rules applicable to the party losing the case apply. Therefore, in theory, the representative bears the expenses and the fees of his or her legal counsel. In reality, though, the representative is generally not charged anything by the law firm acting on behalf of the group. When the action is funded by the Class Action Assistance Fund, the fund covers payment of court costs in accordance with the usual rules governing cost awards.“ 593. The court may award the representative plaintiff an indemnity for disbursements and an amount to cover legal costs and the lawyer’s professional fee. Both are payable out of the amount recovered collectively or before payment of individual claims.In the interests of the class members, the court assesses whether the fee charged by the representative plaintiff’s lawyer is reasonable; if the fee is not reasonable, the court may determine it.Regardless of whether the Class Action Assistance Fund provided assistance to the representative plaintiff, the court hears the Fund before ruling on the legal costs and the fee. The court considers whether or not the Fund guaranteed payment of all or any portion of the legal costs or the fee.”Article 593 C.C.P. is inspired by case law and current practice. The legislator now expressly provides that the representative, if successful, is entitled to the reimbursement of the professional fees of the lawyer who represented him or her, the court having to ensure that such fees are reasonable and set the amount. This new provision will also allow the representative to receive financial compensation in recognition of time spent and efforts made in the conduct of the class action for the benefit of all members. It thus formalizes a common practice, especially in out-of-court settlements, of paying a sometimes rather substantial amount to the representative, with such indemnity having to be approved by the court. With article 593 C.C.P., the legislator has silenced the protestations of the Class Action Assistance Fund, which regularly intervened in settlement hearings to object to the representative receiving any form of monetary compensation.CONCLUSIONThese amendments clarify the rules of the game for class actions by codifying current practice and making significant innovations, such as opening the door to appeals upon leave from judgments granting motions for authorization to institute a class action, thereby eliminating what was considered by some to be a major breach of procedural fairness.The main conditions for instituting a class action, currently set out in article 1002 C.C.P., will now be found in C.C.P. article 574 and on the whole they remain the same. The same is true of conditions for authorization, which will henceforth be found in subparagraphs 1 through 4 of C.C.P. article 574.The Quebec Bar would have liked to see the legislator further condition the possibility of presenting relevant evidence at the authorization stage pursuant to current article 1002 C.C.P. or recognize agreements entered into between the parties in this respect, but this provision has not been modified by section 574 C.C.P. The choice has been made not to intervene in view of the fact that case law is now sufficiently established as to the criteria justifying the presentation of relevant evidence at the authorization stage.The reform does not make fundamental changes to the ground rules for class actions, but it codifies certain practices and approaches while making the Quebec class action regime a little more attractive in the face of a growing number of multi-jurisdictional class actions involving Quebec residents. That is a good thing.The new Code of Civil Procedure is expected to come into force in the fall of 2015._________________________________________1 Brief of the Quebec Bar on the Draft Bill instituting the new Code of Civil Procedure.2 2013 Q.C.C.S. 6617.3 Section 30(2) of the Class Proceedings Act, 1992, S.O. 1992, c. 6. 4 Section 36(1)(a) R.S.B.C.1996 c. 50.

On January 16, 2014, the Supreme Court of Canada1 affirmed the Court of Appeal of Québec2 judgment which authorized the class action brought against Vivendi Canada Inc. (“Vivendi”). This important decision confirms, among other things, that the rules for authorizing class actions in Quebec are more liberal than those in the common law provinces.THE FACTSSeagram Ltd. (“Seagram”), which was established in 1857, is a producer of wine and spirits. Its head office and principal place of business are in Montreal.In 1977, Seagram set up a supplemental health insurance plan for its management and non-unionized employees (the “Plan”). The Plan covers eligible employees both while employed and after they retire.In 1985, Seagram unilaterally amended the terms of the Plan, adding a clause pursuant to which it reserved its right to modify or suspend the Plan at any time.In December 2000, Vivendi S.A. acquired Seagram, which had over 700 employees at the time.In December 2001, Seagram’s assets relating to the production of wine and spirits were sold to Pernod Ricard and Diageo, and Seagram ultimately became Vivendi.In September 2008, Vivendi advised the retirees and beneficiaries that it would be making several amendments to the Plan which would take effect on January 1, 2009 (the “Amendments”):  the annual deductible retirees and beneficiaries had to pay would be substantially increased; only prescription drugs on the list of drugs for the province of residence of retirees or beneficiaries would henceforth be reimbursed; a lifetime maximum of $15,000 for all coverage under the Plan would be introduced whereas there was none before.In 2009, Michel Dell’Aniello applied to the Superior Court of Québec for authorization to institute a class action and asked it to ascribe to him the status of representative of the following persons:“[TRANSLATION] All retired officers and employees of the former Seagram Company Limited who are eligible for post-retirement medical care under Vivendi Canada Inc.’s health care plan (“Plan”) and eligible dependents within the meaning of the Plan (“beneficiaries”), as well as, with regard to the damages claimed, the successors of any such officers, employees or beneficiaries who have died since January 1, 2009.” In his action, Mr. Dell’Aniello sought, among other things, a declaration that Vivendi illegally amended the Plan, and to have the Amendments cancelled and the Plan reinstated as it was before the Amendments. The proposed class includes some 250 retirees or surviving spouses of retirees who worked in six provinces—134 in Quebec, 82 in Ontario, 3 in Alberta, 16 in British Columbia, 2 in Saskatchewan and 13 in Manitoba.THE SUPERIOR COURT OF QUÉBEC DECISION3On August 3, 2010, the Superior Court of Québec dismissed Mr. Dell’Aniello’s motion for authorization to institute a class action. Contrary to what Vivendi had argued, Justice Mayer held that, pursuant to article 3148 (3) C.C.Q., Quebec authorities have jurisdiction to hear the action provided the class action is authorized. He found, among other things, that it is easier and more convenient to institute the class action in Quebec since over half the potential group members, i.e. 53.7%, live in Quebec.However, the judge refused to authorize the class action, finding that it was a range of individual recourses and that the requirement that there be similar or related questions of law or fact set out in article 1003 a) C.C.P. was not met. In his view, the class action is therefore not the most appropriate procedural vehicle. He was of the opinion that if the action was authorized, the judge would have to conduct a detailed review of a multitude of individual circumstances, which would constitute a multitude of mini-trials. Because the right to insurance benefits crystallizes at the time of retirement, the intention of the parties with respect to the vesting of rights must be determined as of that time. Hence, the contract together with the communications between the employer and each class member must be examined to determine whether any rights have vested.The judge also examined the situation of certain subgroups of retirees and beneficiaries and said that their right to post-retirement insurance benefits did not crystallize, since the unilateral amendment clause added in 1985 is inconsistent with an intention to confer a vested right.Lastly, the judge added that the diversity of the legislative schemes applicable to individual claims, which stems from the fact that the retirees had worked in six different provinces, shows the lack of homogeneity of the proposed group and supported a refusal to authorize the class action.THE COURT OF APPEAL OF QUÉBEC DECISION2On February 29, 2012, the Court of Appeal of Québec quashed the judgment in first instance and authorized Mr. Dell’Aniello to institute a class action. Justice Léger, writing for the Court, held that at the authorization stage, the court’s analysis must be limited to whether there is a prima facie case. According to the Court of Appeal, the motion judge ruled on the merits of the case in determining that the right of certain retirees and beneficiaries to post-retirement insurance benefits had not crystallized. This showed that he conducted an in-depth analysis of individual questions rather than a preliminary analysis. The Court of Appeal was of the opinion that the authorization stage is a mere screening mechanism and that, accordingly, the motion judge overstepped the bounds of this function.After examining the applicable criteria and the allegations in Mr. Dell’Aniello’s motion, the Court of Appeal held that there was in fact a common question at the heart of the class action, namely the validity or legality of the Amendments made to the Plan. The Court held:[Translation] “[64] In this particular context, I believe that the main question at issue is whether the 2009 Amendments, which apply to all members of the Class, are valid or lawful. That issue can obviously be broken down in turn into specific questions which together constitute the following related questions which the appellant has identified in this motion for authorization. Accordingly, if the analysis is based on the questions actually at issue rather than on factual differences that are not relevant at the preliminary stage, it is inappropriate to create subgroups in order to decide the motion.” The Court added that the multitude of legal principles which could apply to each group member was not the core of the dispute but involved the existence of vested rights.The Court of Appeal held that the common question raised in Mr. Dell’Aniello’s application for authorization to institute a class action is related for all the group members and that the subsequent questions the Court will have to decide if the action is authorized cannot be examined at the authorization stage.THE SUPREME COURT OF CANADA DECISION1The Court affirmed the Court of Appeal judgment and held that the Superior Court judge should have authorized the class action pursuant to the criteria set forth in article 1003 C.C.P.Firstly, the Court of Appeal was justified in intervening and amending the authorization judgment. It is not up to the authorization judge to rule on the merits of the case. By acting as he did, the motion judge committed an error in assessing the relatedness criterion of article 1003 a) C.C.P.For a question to be common in a class action, success for one member of the class does not necessarily have to lead to success for all the members. However, success for one member must not result in failure for another.Thus, and particularly in Quebec, the relatedness requirement set out in the Code of Civil Procedure must be interpreted liberally. The Supreme Court warns against importing common law principles into the analysis of the tests set out in the Code of Civil Procedure and states:“[52] Second, if art. 1003(a) is compared with the legislation of the common law provinces, it can be seen that the wording used to establish the commonality requirement is different in the latter. For example, the requirement is expressed in broader and more flexible terms in Quebec’s C.C.P. than in Ontario’s legislation, which requires the existence not merely of similar or related questions, but of “common issues”: Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 5(1)(c). Moreover, the wording of the Ontario statute is used in the legislation of all the other common law provinces of Canada that have legislated with respect to class actions: Class Proceedings Act, S.A. 2003, c. C 16.5, s. 5(1)(c); Class Proceedings Act, R.S.B.C. 1996, c. 50, s. 4(1)(c); The Class Actions Act, S.S. 2001, c. C 12.01, s. 6(1)(c); Class Proceedings Act, C.C.S.M. c. C130, s. 4(c); Class Proceedings Act, S.N.S. 2007, c. 28, s. 7(1)(c); Class Proceedings Act, R.S.N.B. 2011, c. 125, s. 6(1)(c); Class Actions Act, S.N.L. 2001, c. C 18.1, s. 5(1)(c).”(emphasis added)and further on:“[57] Thus, the Quebec approach to authorization is more flexible than the one taken in the common law provinces, although the latter provinces do generally subscribe to an interpretation that is favourable to the class action. The Quebec approach is also more flexible than the current approach in the United States: Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011). As Professor Lafond says, [TRANSLATION] “Quebec procedure surpasses in this regard the procedure of the other Canadian provinces, and of England and the United States, which struggle with the rigid concepts of 'same interest' or 'common interest', and of 'predominance of the common issues'”: Le recours collectif comme voie d’accès à la justice pour les consommateurs, at p. 408.”In short, authorization judges should not place undue emphasis on the fact that several individual questions might have to be analyzed. Instead, they should ask themselves whether the person who wishes to bring a class action has established the presence of an identical, similar or related question that can serve to advance the resolution of all the class members’ claims and that could ultimately have an effect on the outcome of the case.According to the Supreme Court, the diversity of the legislative schemes that could apply to the individual claims also does not constitute a sufficient basis for refusing to authorize the class action.The Supreme Court also points out that the principle of proportionality set out in article 4.2 C.C.P. is not a separate fifth criterion to be considered in assessing the authorization of a class action. Although the principle of proportionality may be used in assessing each of the criterion of article 1003 C.C.P., they are exhaustive. Where the authorization judge is of the opinion that the four criteria of article 1003 C.C.P. are met, he must authorize the class action without asking whether it is the most appropriate procedural vehicle.The Supreme Court therefore held that the questions raised in Mr. Dell’Aniello’s motion are sufficiently related and similar to justify a class action.CONCLUSIONThis decision reminds us firstly that the conditions for authorizing a class action are more liberal in Quebec than elsewhere in Canada, as the Supreme Court also recently noted in Infineon4. Although decisions involving the commonality requirement rendered by common law courts may sometimes be used as a guide, they must be analyzed with caution. In the United States, the courts apply the concept of the predominance of the common issues. In Quebec, it need only be shown that there is a common issue which is relevant and significant enough for all the class members, as the Court of Appeal pointed out in Suroît5. Furthermore, in our opinion, some class actions which raise intrinsically individual questions (such as misrepresentation in contractual matters) should not meet the requirements for authorizing an action.________________________________1 Vivendi Canada Inc. v. Dell’Aniello, 2014 SCC 1, LeBel, Abella, Rothstein, Cromwell, Moldaver, Karakatsanis and Wagner, JJ. (reasons drafted by LeBel and Wagner, JJ.). 2 Dell’Aniello v. Vivendi Canda Inc., 2012 QCCA 384 (Jacques Chamberland, André Rochon and Jacques A. Léger, JJ.). 3 Dell’Aniello v. Vivendi Canada Inc., 2012 QCCS 3416 (Paul Mayer, J.). 4 Infineon Technologies A.G. v. Option consommateurs, 2013 CSC 59. 5 Collectif de défense des droits de la Montérégie (CDDM) v. Centre hospitalier régional du Suroît du Centre de santé et de services sociaux du Suroît, 2011 QCCA 826.

Facts and judicial historyThe Supreme Court of Canada has rendered a decision which is likely to generate a lot of commentary in the Canadian class action scene. On December 12, 2013, the Court issued a ruling in the case of AIC Limited v. Fischer1 (hereinafter 'Fischer'), now frequently referred to as the 'market timing decision'. While the issue of market timing has given rise to class actions in several Canadian provinces, the case in question originated in Ontario, and the Court's unanimous decision2 was based on the applicable class action rules in Ontario, as set out in that province's Class Proceedings Act, 1992 (the 'C.P.A.').3In this decision, the Supreme Court ultimately gives the green light to the certification of a class action instituted by numerous investors, represented by Mr. Fischer, against two mutual fund managers (AIC Limited and CI Mutual Funds Inc.), who engaged in market timing. This practice consists of attempting to predict the direction of the market based on short-term economic indicators and making purchase and sale decisions of securities based on these predictions. It is a risky practice which can be prejudicial to the long-term value of investments.The primary interest of this decision is the Court's holding on the so-called 'preferable procedure', or preferability, criterion. According to this criterion, the court must assess whether, in the circumstances of the specific case, the certification of a class action is 'preferable' to other means for the members of the proposed class to obtain redress. In other words, the court must determine whether a class action is the preferable procedure to resolve the common issues.In Fischer, the Court decided that the class action could proceed even though the mutual fund managers involved in the proceeding had already concluded a settlement agreement with the Ontario Securities Commission to reimburse the investors for a certain percentage of their losses as a result of the said market timing activities. This settlement agreement was concluded in the context of a parallel regulatory proceeding to which the investors who were members of the class in the proposed class action were not parties.The Court therefore held that this parallel regulatory proceeding was not a preferable procedure capable of barring the certification of the class action, which was nevertheless the preferable procedure for resolving the common issues.The judge at first instance,4 noting that the members of the proposed class had already received monetary compensation, refused to certify the class action because he found that, under the circumstances, it was not the preferable procedure within the meaning of section 5(1)(d) of the C.P.A.This decision was appealed to the Ontario Divisional Court5 which allowed the appeal, overturning the first judge's decision. The Ontario Court of Appeal,6 in turn, dismissed the subsequent appeal, agreeing with the outcome in the Divisional Court, but for different reasons.For its part, the Divisional Court would have certified the class action based on a comparison of the amount of the compensation paid as a result of the regulatory proceeding with the amount of the damages claimed in the proposed class action. By virtue of this comparison, the Court concluded that the class members would still be able to recover a substantial amount in the class-action proceeding and, therefore, that the proceeding before the OSC could not be regarded as preferable to the proposed class action.While the Ontario Court of Appeal confirmed this conclusion of the Divisional Court, it based its decision on a comparison between the class action and the regulatory proceeding — the procedural rights afforded the proposed class members in the class action stood in contrast to their limited ability to participate in the regulatory proceeding. It therefore held that the analysis followed by the court in determining whether a class action is the preferable procedure in a given case must include a component which addresses the procedural rights afforded to the members of the proposed class.The Supreme Court of Canada's decision and the importance of the access to justice criterionIt is important to note that the Supreme Court (whose reasons were delivered by Justice Cromwell) agreed with the reasons of the lower appeal courts, but proposed a new method of analysis for deciding the preferable procedure criterion. Observing that section 5(1)(d) of the C.P.A. requires the court to conduct a comparative analysis between two or more potential recourses, the Supreme Court established the following test, in five steps, for doing so:1) What are the barriers to access to justice?2) What is the potential of the class proceedings to address those barriers?3) What are the alternatives to class proceedings?4) To what extent do the alternatives address the relevant barriers?5) How do the two proceedings compare?The Court added that the central concept of this analysis is access to justice, which has two fundamental components relating to justice, a substantive dimension and a procedural dimension: [24] There is no doubt that access to justice is an important goal of class proceedings. But what is access to justice in this context? It has two dimensions, which are interconnected. One focuses on process and is concerned with whether the claimants have access to a fair process to resolve their claims. The other focuses on substance — the results to be obtained — and is concerned with whether the claimants will receive a just and effective remedy for their claims if established. They are interconnected because in many cases defects of process will raise doubts as to the substantive outcome and defects of substance may point to concerns with the process. As the Honourable Frank Iacobucci put it, “access to justice must contain both a procedural and a substantive component. I find it difficult to accept that providing injured parties with a process to pursue their claims can be divorced from ensuring that the ultimate remedy arising from the process provides substantive justice where warranted”: “What Is Access to Justice in the Context of Class Actions?”, in J. Kalajdzic, ed., Accessing Justice: Appraising Class Actions Ten Years After Dutton, Hollick & Rumley (2011), 17, at p. 20. While it may be analytically convenient to look at process and substance considerations separately, this must not be done at the expense of an overall assessment of the access to justice implications of the proposed class action.After conducting the five-step analysis which it proposed in this case, the Court, as noted above, found that the proceeding before the OSC was not the preferable procedure, and upheld the decisions of the lower appeal courts. Accordingly, the class action proposed by the investors was certified.Conclusion and impact on class actions in Quebec and CanadaThis decision will, in our view, have a significant impact on class action litigation in Canada. Until now, defence attorneys have sometimes successfully pleaded that the certification of a class action was barred because there was a chance that the members could obtain redress through another proceeding. The argument that the goals of the class action — access to justice, judicial economy, and behavior modification — could be achieved otherwise than by resorting to the courts of law was a seductive one, and a significant number of class actions were previously dismissed on this basis at the certification stage.However, the odds are that the effect of this judgment of the Supreme Court will be to facilitate the certification of class actions notwithstanding that regulatory proceedings may be possible, or even where the respondents have set up a voluntary settlement process to address specific problems faced by their clients, if the representative can show that those other proceedings do not fully resolve the matter.It should be noted that no criterion similar to the preferability criterion exists in the Quebec legislation. Nevertheless, it will be interesting to see whether the Fischer case has a limited or more substantial impact on the class-action law in Quebec. The Quebec courts could choose to base themselves on this decision in assessing the criteria for authorization of class actions. If so, in our view, they would likely do so by reminding us of the importance of the concept of access to justice and the fact that it is unquestionably one of the pillars underlying the creation of the class action procedure in 1978.________________________________1 2013 SCC 69.2 The Court's decision was written by Justice Cromwell (and concurred in by Chief Justice McLachlin and Justices LeBel, Rothstein, Moldaver, Karakatsanis and Wagner).3 S.O. 1992, c. 6, and specifically section 5(1)(d).4 Justice Perell of the Ontario Superior Court of Justice.5 Ontario Superior Court of Justice, Divisional Court, 2011 ONSC 292 (Justice Molloy, Justices Swinton and Herman concurring).6 2012 ONCA 47 (Chief Justice Winkler, Justices Epstein and Pardu (ad hoc) concurring).

On October 31, 2013, the Supreme Court rendered three judgments with respect to class actions at the authorization or certification stage, one from the Province of Quebec1 and the other two from the Province of British Columbia.2In all three cases, the facts raised issues with respect to the price fixing of consumer products in contravention of the Competition Act,3 notably through a conspiracy. The class representatives sought to institute class actions against the persons or companies allegedly responsible for the price fixing, which raised the price of these products, on behalf of members of the class of persons who directly or indirectly purchased the products. Among other things, the three actions alleged the civil fault of the defendant companies.In the Infineon Technologies case ('Infineon'), the manufacturers of dynamic random-access memory microchips (“DRAM”), which allow information to be electronically stored and rapidly retrieved for use in a wide range of electronic devices, were alleged to have taken part in an international conspiracy to fix the price of the product, resulting in an increase in the purchase price. In the Pro-Sys Consultants Ltd. case ('Pro-Sys'), Microsoft was alleged to have engaged in unlawful conduct by overcharging for its operating systems and applications software. And in the Sun-Rype Products Ltd. case ('Sun-Rype'), manufacturers of food products allegedly engaged in an illegal conspiracy to fix the price of high fructose corn syrup used in various food products, including, for example, soft drinks.The three decisions raised the issue as to whether indirect purchasers of the products, hence, customers who did not purchase the product directly from the alleged overchargers, but who purchased it indirectly from a party further down the chain of distribution, could institute proceedings directly against the person alleged to have fixed the price. The Court’s reasons in answer to this question were rendered in the Pro-Sys matter and applied in the other two cases. In so doing, the Supreme Court resolved a judicial controversy over the rights and recourses of indirect purchasers in similar circumstances.In Sun-Rype, the Court dealt with the question as to whether a class of persons consisting both of purchasers who acquired the product directly from the party allegedly responsible for the price fixing, and of indirect purchasers, constituted an identifiable class.Finally, in Infineon, the Court dealt with the issue of the jurisdiction of the Quebec courts to authorize the bringing of a class action in the context where a product was purchased on the Internet or “online” from a company which manufactures and conducts business outside the province, such as a distance contract.Indirect Purchasers’ Right of Action: The Pro-Sys CaseIn reasons delivered by Justice Rothstein, the Court concluded that indirect purchasers could bring an action to recover losses which they suffered in purchasing a product whose price had allegedly been increased illegally. Justice Rothstein dismissed the argument pursuant to which only direct purchasers, who may have subsequently transferred the additional costs to subsequent purchasers, had a right of action. The risk of multiple recovery and the complexities of the evidence which the representatives of the class would have to adduce did not constitute sufficient reasons to stand in the way of allowing indirect purchasers to make their case against those responsible for the price fixing. Moreover, according to Justice Rothstein, the deterrence function of the Competition Act was not impaired by the actions of indirect purchasers.The Supreme Court of Canada therefore distinguished its position from that of the Supreme Court of the United States,4 which concluded that indirect purchasers had no cause of action against those responsible for the price fixing. According to Justice Rothstein, the refusal by a number of state level courts to follow the federal precedent, and the more recent doctrinal discussions in support of authorizing the right of action of indirect purchasers against the perpetrator of the illegal price fixing, favors the position of allowing the indirect purchasers’ right of action.After reviewing the criteria for certification, the Supreme Court concluded that they had all been met, and therefore granted the certification of the action as a class proceeding.Direct and Indirect Purchasers as Class Members: The Sun-Rype CaseIn a judgment for the majority, Justice Rothstein5 concluded that a class made up of indirect and direct purchasers met the requirement for an identifiable class. Although certain members of the class might not have been able to prove a direct individual loss, the proposed class did not give rise to sufficient difficulties that would have warranted dismissing the action.However, in this case, the Court concluded that the criteria for certification had not been met. Based on the evidence, it was impossible for indirect purchasers to prove they had purchased a product containing high fructose corn syrup, and it was therefore impossible to prove they had suffered a loss. The Court found that there was therefore no factual basis to determine the class membership of indirect purchasers. According to Justice Rothstein, the Appellants had not met the relatively low evidentiary burden to adduce evidence to establish some basis in fact that at least two class members could be identified.In the dissenting opinion written by Justice Karakatsanis and concurred in by Justice Cromwell, Justice Karakatsanis came to the conclusion that the facts as alleged provided a sufficient evidentiary basis to reach a finding that there was “an identifiable class of two or more persons”.According to the dissent, evidentiary difficulties should not stand in the way of certification.Jurisdiction of the Quebec Courts: The Infineon CaseIn Infineon, the Petitioner, Option consommateurs, sought authorization to institute a class action against the manufacturers of DRAM chips used in various electronic devices, including personal computers. The designated class representative purchased her computer online by credit card from a company operating exclusively outside Quebec and which had no place of business in Quebec. Option consommateurs alleged that the price-fixing conspiracy artificially inflated prices of DRAM and products containing DRAM sold in Quebec. The manufacturers argued that the Quebec courts lacked jurisdiction because the contract was formed outside Quebec and none of the alleged faults, including the conspiracy, was committed in Quebec.The Supreme Court acknowledged that the challenge to Quebec’s jurisdiction could properly be raised and dealt with at the outset of a proceeding for the authorization of a class action. Even if a Quebec court concludes that it has jurisdiction, the issue may still be raised again at a later stage of the proceeding because the judgment rendered at this stage is only an interlocutory decision.Relying on article 3148 of the Civil Code of Quebec, Justices LeBel and Wagner, in an unanimous decision by the Court, concluded that the Quebec courts had jurisdiction. According to them, the alleged economic damage suffered by the purchasers of the products consisted of a higher price resulting from the conspiracy and constituted a sufficient connection with the Province of Quebec to ground jurisdiction. In other words, since the pecuniary loss was suffered in Quebec, this gave the Quebec courts jurisdiction. Moreover, the contract at issue was a “distance contract”, as defined by the Consumer Protection Act,6 which provides that it is deemed to be entered into at the address of the consumer, which, in this case, was in Quebec.Finally, Justices LeBel and Wagner concluded that the criteria for the authorization of a class action set out in article 1003 of the Code of Civil Procedure ('C.C.P.') had been met. They reiterated that, at this preliminary procedural stage, the criteria for the authorization of a class action must be interpreted and applied broadly, and that the burden is one of demonstration and not of proof. The Court noted that, in Quebec, the burden at the authorization stage is less onerous than at the certification stage in other Canadian jurisdictions. Thus, the Court highlighted that, in other Canadian jurisdictions, indirect purchasers would have to show that their claim has a sufficient basis in fact, and would have to produce expert testimony demonstrating an aggregate loss. To impose such a burden would be inconsistent with the requirements of article 1003 C.C.P. The class action was therefore authorized.ConclusionThese three judgments will certainly facilitate the authorization of class actions by direct and indirect purchasers. Moreover, consumers who purchase products over the Internet from the comfort of their homes may have a right of action against the persons that are alleged to have increased the prices. In the context of purchases in Quebec, where the economic damages are suffered in Quebec, consumers, and the associations who represent them, will in all likelihood resort to launching class action proceedings in Quebec, even where the vendor or manufacturer is located outside Quebec._________________________________________1 Infineon Technologies AG v. Option consommateurs, 2013 SCC 59.2 Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57 and Sun-Rype Products Ltd. v. Archer Daniels Midland Company, 2013 SCC 58.3 R.S.C., 1985, c. C-34.4 Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977).5 With Chief Justice McLachlin and Justices LeBel, Fish, Abella, Moldaver and Wagner.6 R.S.Q., c. P-40.1.

INTRODUCTIONOn July 17, 2013, the Court of Appeal issued an unprecedented judgment in Quebec in the case of Theratechnologies inc. v. 121851 Canada inc.1 Justice Clément Gascon, writing for the court, held, in a unanimous decision, that a judgment having authorized a class action for damages under section 225.4 of the Securities Act (Quebec)2 (hereinafter the “S.A.”) can be appealed despite the rule laid down in the Code of Civil Procedure (Quebec) (hereinafter the “C.C.P.”) to the effect that judgments authorizing the institution of a class action are unappealable.FACTS UNDERLYING THE DISPUTEIn this case, 121851 Canada Inc. (hereinafter “121CAN”) accused Theratechnologies, a corporation listed on the Toronto Stock Exchange, and its officers (hereinafter collectively “Thera”) of failing to disclose a “material change” through the publication of a press release, which Thera was required to do on the basis of its status as a reporting issuer under the S.A. and its related continuous disclosure obligations under sections 73 S.A. and 7.1 of the Regulation 51-102 respecting continuous disclosure obligations.3 Since 121CAN had held 190,000 common shares of Theratechnologies, it applied for an authorization to institute a class action.PROCEEDINGS IN THE SUPERIOR COURTIn the Superior Court of Quebec, 121CAN filed a motion for authorization to institute a class action based only on the provisions of the C.C.P. Thera then filed an application for dismissal on the ground that the prior authorization required under subparagraph 1 of section 225.4 S.A. had not been obtained. Indeed, since Bill 194 came into force, a specific civil remedy has been available allowing secondary market investors to bring an action in damages for verbal or written misrepresentation or the failure of the issuer to comply with its disclosure obligations.At the hearing on the motion for dismissal filed by Thera, Justice Marc André Blanchard of the Superior Court authorized an amendment which allowed 121CAN to add a second motion for authorization under sections 225.4 and following of the S.A.5Both motions were heard at a joint hearing at the end of which Justice Blanchard allowed both motions and authorized a class action for damages.6THE JUDGMENT OF THE COURT OF APPEALIn the Court of Appeal, acknowledging that the authorization under article 1003 C.C.P. could not be appealed since such an appeal is clearly prohibited by the second paragraph of article 1010 C.C.P., Thera applied for leave to appeal the authorization granted under section 225.4 S.A., arguing that such an appeal exists under the S.A.Leave for appeal is normally dealt with by a single judge, but on account of the unprecedented nature of the issue, it was referred to a full panel of the Court.7In a unanimous decision drafted by Justice Gascon, the Court of Appeal allowed the motion for leave to appeal filed by Thera, and then dismissed the appeal. In this bulletin, we will mainly consider the issue of leave to appeal an authorization judgment under section 225.4 S.A., rather than the reasons underlying the dismissal of the appeal on the merits.Leave to appeal - Decision of Justice GasconAs the basis for his analysis and decision on the issue, Justice Gascon reviewed in detail the context of the adoption of the liability regime implemented through the introduction of Bill 19 and sections 225.2 and following of the S.A. and the purpose of this new remedy.Historically, to prevail in an action in damages under the S.A., the plaintiff was required to prove a fault, a loss and causation, as in any civil liability action. However, in the specific context of the financial markets, these requirements constituted nearly insurmountable barriers for investors, who had to demonstrate that they had relied on [translation] “false information or the failure to disclose a material change for the purchase of the security and that the change in the market price of the security resulted from the false declaration or the failure to disclose”.8 These requirements also made it very difficult to institute a class action because the facts having led to each of the investments by the members of the class could be different.It was in this context that the Allen Committee of the Toronto Stock Exchange published a report in 1997 which proposed the creation of a specific liability regime for breaches of the statutory continuous disclosure requirements. The recommendations in this report formed the basis for the adoption of Bill 19.Justice Gascon assessed this new liability regime in the following terms:[Translation][62] The purpose of the remedy is to contribute to improving the quantity and quality of the information disclosed on the market; it serves first as a deterrent, then as a means of compensating victims.[63] So to balance strengths, the new remedy establishes a presumption in favour of the investor: when the security is acquired or transferred concurrently to a misrepresentation or failure to disclose a material change, the fluctuation in the value of the security is presumed to be attributable to this fault. The investor is therefore freed of a heavy burden, that is, to demonstrate that he relied on the false information or the failure to disclose a material change and that the variation of the price of the security is the result of such information or omission.[64] In return, to avoid abuse, an authorization mechanism for investors’ remedies is instituted to weed out remedies instituted in bad faith and which do not offer a reasonable possibility of success.(our emphasis)Considering that in no case the silence of the law constitutes a denial of the right to appeal and that furthermore, neither the Allen report nor the parliamentary debate preceding the adoption of Bill 19 discussed such a prohibition, he concluded that the legislator voluntarily chose not to prohibit the right to appeal in section 225.4 S.A. Considering then that the portion of the judgment having authorized the action in damages as being an interlocutory judgment, Justice Gascon, for the Court, was of the view that the general principles governing the right to appeal, as set out in articles 29 and 511 C.C.P. had to be applied in the circumstances to decide on the issue and that, accordingly, the judgment was appealable upon leave. The Court therefore agreed with Thera’s position.Reminding in passing that the remedy under section 225.4 S.A. may be exercised both as an individual remedy and a class action, the Court granted to Thera leave to appeal.Comments In this judgment, the Court of Appeal clearly establishes a distinction between the rules applicable to the regime of authorization to institute a class action under articles 999 and following C.C.P. and those applicable under the special liability regime brought about by the amendments to the S.A. made under Bill 19. In fact, despite the joint hearing of these two applications for authorization, the Court of Appeal refused the analogy suggested by 121CAN whereby the two applications had to be dealt with in the same way and, accordingly, that the Court should refuse leave to appeal the portion of judgment authorizing the exercise of an action in damages. Although the Court acknowledged that the procedural vehicle of a class action is often the most appropriate in such circumstances for the investors, it insisted on the purposes of these two mechanisms which it deems to be specific and separate:[translation][69] It follows that the purpose of the authorization mechanism under sec. 225.4 S.A. is different from that under the Code of Civil Procedure provisions dealing with class actions. While the purpose of the latter is to ensure the quality of the legal syllogism proposed trough a burden of demonstration and not evidence, the purpose of the former is to weed out opportunistic remedies where good faith is lacking and where the proof of the fault is not “reasonably established.”In the case under review, the parties found themselves in a situation where, without access to the specific regime under the S.A., they would have been deprived of the Court of Appeal clarifications on issues directly related to the authorization of the class action.This case illustrates the fact that the Court of Appeal could validly play the role of “gate keeper” which would be entrusted to it if the appeal of an authorization judgment was possible upon leave.We are also of the view that such a right to appeal would restore a balance between the forces present by putting an end to this procedural asymmetry.In this respect, it is useful to mention that the Quebec Bar issued a favourable recommendation for this avenue as part of the consultation on the reform of the Code of Civil Procedure (Bill 28) in a context where such a right to appeal would be in line with the rules governing the appeal of interlocutory judgments.Lastly, although the Theratechnologies may rightly be considered as a particular case, we also wonder about the practical consequences of such a decision in the future. For example, what about a situation where the authorization of the class action would be granted under the C.C.P. without this judgment being appealable, even where the Court of Appeal would be of the view that there is no reasonable possibility for the plaintiff to be successful under the S.A.?_________________________________________ 1 2013 QCCA 1256.2 R.S.Q., c. V-1.1.3 R.R.Q, c V-1.1, r. 24, (Securities).4 This Bill has been incorporated into the S.A. on November 9, 2007 as sections 225.2 to 236.1 S.A. under the title “Civil Actions”.5 See 121851 Canada inc. v. Theratechnologies inc., 2010 QCCS 6021.6 121851 Canada inc. v. Theratechnologies inc., 2012 QCCS 699.7 Par. [32] of the judgment.8 See 2013 QCCA 1256, supra note 1, at par. 58.

Although non-compliance with the Consumer Protection Act (the “CPA”) is generally sanctioned by the nullity of the CPA non-compliant clauses, or of the contract in its entirety, in cases involving written notices of forfeiture of the benefit of the term, the courts have sometimes decided to maintain the validity of the non-compliant notices if they were not prejudicial to the consumer’s rights. The following two judgment support this view.CAISSE POPULAIRE DESJARDINS DU PORTAGE JUDGMENTIn a recent Court of Québec judgment, Caisse Populaire Desjardins du Portage v. Létourneau1, the Court dismissed the defendant’s plea which sought to annul the notice of forfeiture of the benefit of the term because the statements of account attached to the said notice did not detail all of the information prescribed by the Regulation respecting the application of the CPA (the “Regulation”). Contrary to the requirements of subsections 67(e) and 67(f) of the Regulation, the statements of account in question did not clearly indicate the balance of net capital remaining after each sum of money paid into the defendant’s account, nor the portion thereof used to pay the net capital and the portion used to pay credit charges.Having sent two notices of forfeiture of the benefit of the term and waited the requisite thirty (30) days for the forfeiture to occur, the Caisse sued the defendant for the reimbursement of two personal loans on which the defendant failed to make monthly instalments.At trial, the defendant admitted owing payments on the loans, however she submitted that the notices were invalid because the statements of account did not include all of the information required by the Regulation. Therefore, she argued that the forfeiture of the benefit of the term had not occurred and she was only liable to pay the plaintiff the lapsed instalments, rather than the balance of the loans.The Caisse admitted that the statements of account did not respect the form prescribed by the Regulation, but argued that the information omitted was not material and should not invalidate the notices.The Court noted that the purpose of the statement of account attached to the notice of forfeiture of the benefit of the term is to inform the consumer of the amount owing so that he may, within thirty (30) days of the receipt of such notice, remedy the default by paying the stated amount to the merchant. In this case, the Court sided with the Caisse, agreeing that the notices and the attached statements of account contained the information required for the defendant to ascertain and remedy its default. Citing another Court of Québec judgment in the case of Banque de Montréal v. Bujold2, rendered in 2009, the Court reminded us that the CPA was adopted in order to protect consumers from illegal practices of merchants, but it should not enable consumers to plead trivial and immaterial non-compliance with the law in order to avoid their obligations.BUJOLD JUDGMENTIn the Bujold case, the plaintiff bank sued the defendant for the balance due under the instalment sales contract signed for the purchase of a used vehicle. Similarly to the judgment summarized above, the defendant submitted to the court that the notice of forfeiture of the benefit of the term did not respect subsections 67(e) and 67(f) of the Regulation and should therefore be annulled. The defendant, however, also submitted that the credit contract itself should be annulled due to the bank’s failure to adequately investigate his financial situation, and the fact that it was obvious that the defendant had no use for the purchased vehicle. In its judgment, the Court noted that the CPA is meant to protect vulnerable consumers, but should not be abused by them to obtain the nullity of clauses or contracts that are otherwise valid. The Court admitted that it could annul the notice of forfeiture of the benefit of the term based on the defendant’s submissions, but such a decision would be contrary to the best interests of justice because it would inevitably result in a new notice being issued by the plaintiff, causing additional delays and possibly further contestation by the defendant.On the issue of the nullity of the consumer contract itself, the Court questioned the good faith of the defendant, Bujold, because he made multiple flagrantly incorrect statements on the bank’s credit application form, including a false declaration of employment and revenue and false details regarding hypothecary loan payments, and blatantly neglected to declare several outstanding personal loans. Yet, the defendant did not hesitate to sign at the bottom of the credit application form, certifying that all the information provided to the bank was true and correct.In light of these circumstances, the Court found that the bank was not negligent in its duty to investigate the plaintiff’s financial background prior to granting the credit. According to the Court, the real reasons which explained why the defendant obtained a loan to purchase a vehicle he did not need were the defendant’s own misrepresentations and his general lack of business acumen. Moreover, the Court criticized the defendant’s reprehensible conduct, holding that this conduct estopped the defendant from arguing the deficiencies in the notices before the Court. For these reasons, the Court upheld the validity of both the credit contract as well as the notice of forfeiture of the benefit of the term and ordered the defendant to pay the outstanding debt to the plaintiff.COMMENTSMerchants should not view the courts in these cases as being generally lenient toward non-compliance with consumer protection legislation. However, these cases are a reminder that a merchant’s rights should not be undermined on the basis of technicalities or trivial and immaterial non-compliance that does not prejudice the consumer.While it is difficult to generalize from these cases, the courts have at least given some flexibility to merchants in cases in which their notices of forfeiture of the benefit of the term are deficient where the accompanying statements of account fail to clearly indicate the balance of net capital remaining and the portion thereof used to pay the credit charges. The real criterion seems to be whether the defendant was able to ascertain and remedy its default.The Bujold judgment also provides some guidance on the extent of the merchants’ duty to investigate the degree of the consumer’s consent in accordance with the criteria under section 9 of the CPA (namely, the condition of the parties, the circumstances in which the contract was entered into and the benefits arising from the contract for the consumer). According to case law, the consumer’s personal circumstances should be considered and verified by the merchant prior to entering into a binding contract with the consumer. In carrying out such verifications, a merchant may rely on the (apparently true) representations made by the consumer._________________________________________ 1. Caisse Populaire Desjardins du Portage v. Létourneau, 250-22-002775-125 (C.Q.). 2. Banque de Montréal v. Bujold, 2009 QCCQ 5530.

The decision of the Court of Appeal in the La Capitale case has been expected since February 2012 when the Superior Court dismissed the class action taken against an insurer who, with the consent of the policyholder, had unilaterally modified the waiver of premiums clause in a group insurance contact.1To better understand the context, please refer to our newsletter in June 2012 following the Superior Court judgment.THE FACTSTwo suits were brought against La Capitale by Plaintiffs Tremblay and Beaver, both public sector employees; they were authorized to institute a class action and represent class members covered by the group insurance contract who were or had been disabled since 1996 and from whom the waiver of premiums benefit had been withdrawn by a modification to the insurance contract. The group consisted of approximately 1,200 members.The Plaintiffs became disabled in 1996 and 1997, respectively, and are still disabled. They claim the right to have their premiums waived under their group insurance contract until the age of 65, as long as they remain disabled.When he became disabled in 1996, Mr. Tremblay belonged to a bargaining unit covered by the collective agreements signed with the FTQ. The long-term care centre for which he worked terminated his employment in 2000 due to his disability. In 2005, his bargaining unit became disaffiliated with the FTQ and in June 2006 the insurer notified him that insurance coverage was withdrawn because his union was no longer affiliated with the FTQ.Mr. Beaver’s situation is somewhat different. He was employed by a school board when he became disabled in 1997 and he still retains an employment relationship with it. His insurer notified him in November 2007 that under a new provision of the insurance contract, it could cease granting the waiver of premiums after 36 months of benefits. Because he had benefited from the waiver since 1997, the insurer claimed it was justified in ending it.Plaintiffs Tremblay and Beaver’s claims were joined together for hearing and they claimed, on behalf of the members of the class, that their right to the waiver of premiums be restored.All the contracts entered into between the times of their respective disabilities and the modifications that deprived them of the waiver of premiums for sickness insurance and dental care, which came into force in 2001, contained a clause entitled Modifications to the Policy [Translation], which reads as follows:“The policyholder may, at all times, after agreement with the Insurer, make changes to the contract regarding the categories of eligible persons, the extent of protection and the sharing of costs between the categories of insured persons. Such changes shall then apply to all insured parties, whether active, disabled or retired.” [Translation] (Our underlining)THE SUPERIOR COURT JUDGMENTThe Superior Court concluded that given the power granted to the contracting parties, i.e. the policyholders (a group of numerous associations representing the insureds) as well as the insurer, they could negotiate modifications to the contract because a specific clause authorized them to do so. Thus, the clause terminating the waiver of premiums was valid without the agreement of the individual insureds.The Superior Court added that the waiver is not a benefit recognized in the insurance policy, but rather a provision found in the section on payment of premiums, which confirms that the waiver of premiums is not one of the insured benefits.Although the facts in dispute and the number of parties involved make this a complex case, the real question in dispute is whether the policyholder and the insurer had the right to unilaterally modify the group insurance contract.THE COURT OF APPEAL DECISIONThe Appellants repeated all of their arguments. They claimed that “disability” and the waiver of premiums attached to it at the beginning of their respective disabilities was an insured risk. This right to the waiver crystallized when their disabilities arose and the modification made to the group policy on January 1, 2001 was not valid. Lastly, they claimed that the insurer had committed a fault that engaged its liability.The Court, in a decision written by Justice Thibault, first traced the history of the successive contracts and the provisions of the Civil Code that apply to them.It noted that the contract in force on March 1, 1991 provided for not only a waiver of premiums in cases of disability, but also a clause authorizing modifications to the contract upon agreement between the insurer and the Committee (policyholder) and those modifications apply to all insureds, whether they are active, disabled or retired.The contract in force since January 1, 1997 provided for a waiver of premiums in cases of disability, but it ceased at 65 yearsof age or when the insured no longer fulfilled the conditions of insurability. The clause giving the policyholder and the insurer the power to modify the contract was similar.The contract in force since January 1, 2001 added as a cause of cessation of the waiver of premiums privilege the date on which the Committee confirms cessation of the employees group’s membership in the union, which is the policyholder, or cessation of the member’s membership in the employees group. The 65 years of age limit and the clause permitting modification of the contract remained similar.On January 1, 2008, an endorsement was added to the contract from 2001 and it provided that, in addition to the causes described above, the sickness insurance and dental care plans ceased at the date of the end of the employment relationship or 36 months after the date of the commencement of the participant’s disability.The Court of Appeal confirmed that the benefits that the insurer must pay under the sickness and dental care coverages do not depend on the occurrence of a disability; they are not linked to disability.As for the waiver of premiums that is tied to the occurrence of disability, it is not a coverage to which the insurer has committed itself because the insurer has not taken on responsibility for it, but instead it is shared between the participants. This benefit results from the policyholder’s decision to transfer to the active participants the premiums that the disabled participants are not required to pay.Then the Court considered the argument concerning the “crystallization” of the Appellants’ rights at the times of their respective disabilities, because it is important for the insurers to know whether or not the successive contracts are distinct contracts, although the Court judged this issue to be secondary considering the fact that the contract from 1997 contains a preamble stating that it is a consolidation of the contract and endorsements in force since 1991.The contract applicable at the time of the occurrence of the disability of each of the Appellants was the one from 1997. Although it was replaced by the contract from 2001 and modified by the endorsement of 2008, all the modifications were made at the request of the policyholder because the active employees expressed their dissatisfaction with the high cost of the premiums paid for the plan. At that time, the policyholder’s insurance advisor had informed it that the waiver of premiums benefit until 65 years of age was very generous and that most plans limited the waiver period to three years.Given that all of the contracts that had been in force since the Appellants’ disabilities authorized the policyholder and the insurer to modify them by agreement and that they provided that the modifications applied to all the insureds irrespective of their status, no right could “crystallize” at the dates of disability. However, it was agreed that the Appellants continued to have the benefit of the life insurance with a waiver of premiums.Lastly, the Appellants argued that article 2405 C.C.Q. required that the modification putting an end to the contract in the event of a change in the union’s allegiance be brought to their attention. The Court rejected that argument; the group insurance contract is based on the definition of a given group for the benefit of which it is negotiated. The policyholder has authority from this group to negotiate and could agree on a modification concerning the categories of eligible persons. The Court accepted the views expressed by author Michel Gilbert stating that article 2405 C.C.Q. “can apply only to individual insurance because one cannot expect that participants come forward concerning a modification in which they are not involved.” [Translation]CONCLUSIONThe modification clauses are valid and any change, addition or withdrawal of a coverage or privilege can be invoked against all of the active, disabled or retired insureds, without them having to be notified about it, if the bilateral agreement procedure is respected.The Plaintiffs have 60 days to apply for leave to appeal to the Supreme Court._________________________________________   1 2012 QCCS 746.

This publication was authored by Luc Thibaudeau, former partner of Lavery and now judge in the Civil Division of the Court of Québec, District of Longueuil. The title of this newsletter gives a good summary of the explanatory notes that serve as an introduction to Bill 14, entitled An Act to amend the Charter of the French language, the Charter of human rights and freedoms and other legislative provisions (the “Bill”). The legislator is concerned that English is being used systematically in certain workplaces. The Bill was tabled on December 5, 2012 and the proposed amendments are designed to reaffirm the primacy of French as the official and common language of Quebec.

This publication was authored by Luc Thibaudeau, former partner of Lavery and now judge in the Civil Division of the Court of Québec, District of Longueuil. Lavery keeps a close eye on developments in consumer law. Its leading-edge expertise in the retail trade and class actions has been pointed out many times by people involved in the field. Lavery is committed to keeping the business community informed about this issue by regularly publishing bulletins dealing with case law and legislative developments that could affect, influence and even change business practices. This bulletin discusses a recent Court of Québec decision concerning the liability of a credit card holder in the event of the theft of his card as well as the legislative changes on this issue proposed by Bill 24.

This publication was co-authored by Luc Thibaudeau, former partner of Lavery and now judge in the Civil Division of the Court of Québec, District of Longueuil. Lavery follows the evolution of consumer law closely. Its specialized expertise in the fields of retailing and class actions has been confirmed many times by stakeholders in the milieu. Lavery makes it its duty to keep the business community informed about these matters by regularly publishing bulletins that deal with judicial and legislative developments that are likely to leave their mark and influence or even transform practices in the milieu. The present bulletin analyzes a recent decision of the highest court in the country that will not fail to make waves in an area that affects all of us, that is advertising. On February 28, 2012, the Supreme Court issued its judgment in the case of Richard v. Time Inc. et al. and, reversing the Court of Appeal’s decision, partially reinstated the judgment of Justice Carol Cohen of the Superior Court who concluded that a commercial representation was false and misleading. According to the highest court in the country, the Court of Appeal erred in ruling that the average consumer has “an average level of intelligence, scepticism and curiosity”.

This publication was authored by Luc Thibaudeau, former partner of Lavery and now judge in the Civil Division of the Court of Québec, District of Longueuil. Lavery follows the evolution of consumer law closely. Its specialized expertise in the fields of retailing and class actions has been confirmed many times by stakeholders in the milieu. Lavery makes it its duty to keep the business community informed about these matters by regularly publishing bulletins that deal with judicial and legislative developments that are likely to leave their mark and influence or even transform practices in the milieu. This newsletter deals with a recent decision from the Court of Quebec having to do with consumer loans.[1] Justice Marie Pratte, basing herself on the provisions of the Consumer Protection Act (“CPA”), rejected an application to correct an interest rate that had been erroneously indicated in a money loan contract.

This publication was authored by Luc Thibaudeau, former partner of Lavery and now judge in the Civil Division of the Court of Québec, District of Longueuil. Consumer protection law and the Consumer Protection Act apply first and foremost to economic activities in the retail sector. Expenditures associated with this sector represent more than sixty-five percent of all expenditures in the province. It is also an area of the law which frequently comes before the courts. In many cases, these disputes arise in the context of a class action. Many believe that class actions are well-suited as a procedural vehicle for dealing with some of the provisions of the CPA, such as, for example, the provisions relating to prohibited commercial practices.

This publication was authored by Luc Thibaudeau, former partner of Lavery and now judge in the Civil Division of the Court of Québec, District of Longueuil. Consumer law and the Consumer Protection Act (the “CPA”) are aimed first and foremost at economic activities in the retail sales sector. Spending in this sector represents more than 65% of spending in the province. Consumer law is also an area of the law that the courts are frequently called upon to analyze and, in many instances, the dispute arises in the context of a class action. Many people feel that the class action is an appropriate procedural vehicle for dealing with certain provisions of the CPA, such as those concerning prohibited commercial practices. In recent months, several judgments concerning this area have been rendered and they shed some light, which is always welcome, on certain obligations imposed on merchants by the CPA. The subjects dealt with in these judgments are topical and involve products and services currently offered by many merchants.

Last August 3, the Superior Court of Québec dismissed the motion for authorization to institute a class action filed by Mr. Michel Dell’Aniello against Vivendi Canada Inc. This decision deals with two subjects of interest, namely, unilateral changes made by an employer to the group insurance program offered to the retirees of a business, and class actions that are national in scope.

SMEs are not Immune from Class-Actions Suits in Competition Law SMEs and Trade-Marks Dividing up Corporate Shares in the Event of Divorce, Separation from bed and Board, or Dissolution of a Civil Union

The Quebec Court of Appeal recently rendered a long-awaited decision in a consumer protection class action.On February 26th, the Court dismissed the main appeal and cross-appeal in Brault and Martineau Inc. vs. Riendeau for the reasons which were written by Justice Duval Hesler, which were endorsed by both Justice Gendreau and Justice Dalphond.

The Supreme Court of Canada ended a lengthy legal saga on November 20th, 2008 when it ordered St.Lawrence Cement Inc. to compensate residents of Beauport living near its cement plant. Comments on prescription, the assessment of damages and the granting of future damages.The Supreme Court's decision was expected and will have a major impact. Indeed, this decision imposes a burden that will be almost impossible for businesses to meet. Not only must they comply with the laws and regulations, but now they must also assess the annoyances they could cause to their neighbours and, if such annoyances can be considered abnormal or excessive, they will likely have to pay the price. Businesses will have to be especially prudent, considerate and imaginative to maintain a harmonious rapport with their neighbours.Consequently, we expect to see an increase in the number of class actions involving neighbourhood disturbances and annoyances against businesses and municipalities, which will also have to be careful in managing the development of their territory.

Class action and competition law: Toyota wins in the Court of Appeal

On September 26, 2007, the Court of Appeal dismissed the appeal of appellant Citizens for a Quality of Life and upheld the judgment of the Superior Court dated December 14, 2004, which had refused to grant its motion for authorization to institute a class action against Aéroports de Montréal on the basis of the lack of similar or related questions raised by the recourses of the class members.We understand from the case Citoyens pour une qualité de vie/Citizens for a Quality of Life v. Aéroports de Montréal and the other judgments referred to by the Court of Appeal that the petitioner is primarily responsible for describing the class he seeks to represent and that he must do so in logical and reasonable proportions. Under Article 1005 C.C.P., and in the presence of appropriate evidence, the judge seized with a motion for authorization has the authority to intervene to remodel the class but not to the extent of creating from scratch a description of the class which the petitioner is responsible for. Not only is this task not incumbent on the judge but a description that is too broad may very well lead to the absence of common issues and a preponderance of individual issues. In such a case, the petitioner will see his application for authorization dismissed for failing to comply with Article 1003 (a) C.C.P.

Two of our partners honoured with Québec Bar Mérite awards

On October 31, 2006, the Court of Appeal rendered two key decisions on the issue of neighbourhood annoyances in Quebec. It is greatly to their credit that these two judgments represent a return to more reasonable legal bases on this issue. The two Court of Appeal decisions followed trial court judgments rendered in connection with class actions brought, in one case, by residents living in the vicinity of the Domfer plant in Lasalle and, in the other case, by residents living in the vicinity of the St. Lawrence Cement plant in Beauport. We invite you to read our newsletter on the subject.

On October 18th, 2006, the Quebec Court of Appeal rendered a much-awaited decision regarding class actions. The province’s highest court was called upon to rule on the issue of whether, when there is a multiplicity of defendants, it is necessary that a legal relationship exist between the petitioner applying for authorization to bring a class action and each defendant.Recently by affirming the necessity of a legal relationship between the petitioner and all of the entities he wishes to sue, the Court of Appeal finally dispelled the uncertainty prevailing in Quebec on this issue.

Watering down class actions? Not really?

Cross-Border Class Actions - A Canadian Perspective

Canada: Class Actions in Competition Damage Matters (Available in French only)

Are the Courts Distorting the Nature of Class Actions?

The Application of Ontario's Bill 198 to Securities Class Actions in Quebec

The Court of Appeal Rules on the Constitutionality of the Code of Civil Procedure Amendments Governing Authorizations to Institute Class Actions

The Superior Court Dismisses Three Motions for Authorization to Institute a Class Action

Increase in Class Actions for Violations of the Competition Act - How to Protect Your Business Today

Multi-Jurisdictional Class Actions in Canada : Pragmatism Over Principle ?

Class Actions and The Life Insurance Industry